West Africa - EMAS Offshore Limitedemasoffshore.listedcompany.com/newsroom/20180126... · 2 west...

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West Africa

CORPORATEPROFILE

HEADQUARTERED IN SINGAPORE, EMAS OFFSHORE HOLDS AN ESTABLISHED MARKET POSITION IN THE ASIA PACIFIC AND WEST AFRICA

EMAS Offshore Limited (“EOL”, “EMAS Offshore”, the “Company”, and together with its subsidiaries, the “Group”), is an established service provider which offers offshore support, accommodation and offshore production services to customers in the offshore oil and gas industry throughout the oilfield life cycle, spanning the exploration, development, production and decommissioning stages.

Formerly known as EOC Limited, the Company was incorporated in February 2007 and listed on the Oslo Børs in

October 2007. Renamed EMAS Offshore Limited in September 2014, EMAS Offshore became a dual-listed company with its subsequent secondary listing on the SGX-ST in October 2014.

The Group’s business activities are carried out by two business segments, namely: (i) the Offshore Support and Accommodation Services division and (ii) the Offshore Production Services division. Headquartered in Singapore, EMAS Offshore holds an established position in the Asia Pacific and West Africa. The Group’s excellent operational and HSE (Heath, Safety and Environment) track record has enabled EMAS Offshore to establish strong working relationships with leading international oil majors, national oil companies and various independent operators.

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EMAS Offshore Limited Annual Report 2016

India

Philippines

Brunei

Thailand

MalaysiaSingapore

Vietnam

Review Contents

Corporate Profile002 Mission, Vision and Core Values 005 Chairman’s Message007 Board of Directors009 Management Team010 Directors’ and Management Report021 Our Awards and Recognition in FY2016022 Corporate Structure 024 Corporate Directory

Financial Contents

026 Corporate Governance Report 036 Directors’ Statement041 Independent Auditor’s Report 044 Statements of Financial Position 046 Consolidated Statement of Profit or Loss

and Other Comprehensive Income048 Statements of Changes In Equity 050 Consolidated Statement of Cash Flows053 Notes to the Financial Statements128 Statistics of Shareholdings129 Notice of Annual General Meeting

Attendance/Proxy Form

CONTENTS

Myanmar

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MISSION, VISIONAND CORE VALUES

TO BE THE PREFERRED MARINE SUPPORT SERVICE PROVIDER TO THE EXPLORATION AND PRODUCTION (E&P) SECTOR IN THE OFFSHORE OIL AND GAS INDUSTRY

VISION

TO DELIVER VALUE TO OUR STAKEHOLDERS , CUSTOMERS AND PARTNERS BY CHAMPIONING SAFETY, RELIABILITY AND QUALITY IN OUR OFFSHORE MARINE ASSETS AND PRODUCTION SOLUTIONS

MISSION

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INTEGRITY

CORE VALUES

SOCIAL RESPONSIBILITY AND MUTUAL RESPECT

HEALTH, SAFETY AND ENVIRONMENT (“HSE”)

QUALITY AND OPERATIONAL EXCELLENCE

TEAMWORK

Every EMAS employee will act with the highest level of business ethics and integrity, in compliance with local and international rules and regulations

We embrace social responsibility and value relationships with stakeholders and communities, wherever we operate

Our people all around the world work with different attitudes and cultures, understanding them is important

At EMAS, safety is our way of life. Our commitment to HSE is at the heart of all our business activities

Respect for our environment and future generations

Safety of our employees

We are always determined to meet our delivery and execution targets without compromising on quality and workmanship standards. At EMAS, we strive for excellence and pursue continuous improvement

Building a quality culture and recognising the ultimate cost of poor quality is key

We value teamwork and are dedicated to delivering successful results together with our Clients, Vendors, Colleagues and Stakeholders

Deliver solutions for our clients

Deliver profit to our shareholders

TO OUR STAKEHOLDERS, INCLUDING OUR SHAREHOLDERS, I WOULD ALSO LIKE TO ASSURE YOU THAT WE ARE WORKING EARNESTLY IN SEEKING A COMPREHENSIVE SOLUTION WITH OUR CREDITORS, INCLUDING BANKS AND VENDORS, AND WITH THEIR CONTINUED SUPPORT, WE CAN OVERCOME THIS SEVERE DOWNTURN AND EMERGE AS A STRONGER ENTERPRISE MOVING FORWARD.

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CHAIRMAN’SMESSAGE

DEAR SHAREHOLDERS,

First and foremost, on behalf of the Board of Directors, I would like to express my gratitude for your patience as the publication of the FY2016 Annual Report was delayed which consequently resulted in a delay in holding the Annual General Meeting for FY2016.

FY2016 has been an extremely challenging year for the offshore Oil and Gas (“O&G”) support sector. Charter rates had been and continue to remain depressed, and maintaining utilisation has been a challenge as the market remains oversupplied. These events have all materially impacted the Company.

As of late, there has been a slight improvement in the situation as recent oil prices slowly trended upwards. This has correspondingly resulted in a noticeable gradual increase in enquiries in the Company’s vessels. That being said, the recovery in the O&G sector is not expected to be swift and imminent, as oil prices continue to remain subdued and volatile.

NAVIGATING THROUGH CHALLENGES – KEY DEVELOPMENTSOne key development of the Group has been the divestment of PV Keez Pte Ltd (owner of the Lewek EMAS, the Floating Production Storage Offloading vessel, or FPSO) to Petrofirst Infrastructure 2 Limited. This was completed in December 2016 and is aligned with the Company’s asset-light strategy, with an emphasis being placed on the provision of project management and value-added services in the offshore production space. This move helps to reinforce what has always been the core of our business – the operation of offshore support vessels.

In December 2016, a settlement was reached with Perisai Petroleum Teknologi Berhad (“PPTB”) in relation to SJR Marine (L) Ltd (“Settlement Agreement”), which owns the vessel Enterprise 3. However, the Company remains in dispute with PPTB as subsequent developments resulted in the termination of the Settlement Agreement.

In view of the challenging environment in the O&G industry, and in spite of the Company’s previous efforts in engaging its principal lenders on the refinancing of its financial obligations and the provision of additional working capital facilities not progressing as intended, the Company continues to embark on efforts to restructure its existing secured and unsecured liabilities, as well as any outstanding obligations and contingent liabilities. In August 2017, the Company entered into a binding term sheet with potential investors for the injection of an investment amount of US$50 million as part of the financial restructuring. In December 2017, the Company terminated the term sheet and entered into a new binding term sheet with one of the potential investors for the injection of an investment amount of up to US$50 million as part of the financial restructuring of the Group.

The Company, together with the potential investor, is continuing to work together to progress the restructuring exercise. It will do so chiefly by way of a scheme of arrangement. In this regard, the Company and certain of its subsidiaries have filed applications in the Singapore High Court under section 210(1) of the Companies Act (Chapter 50) to seek leave of court to convene their respective creditors’ meeting to consider and, if thought fit, approve the respective schemes of arrangement.

We will keep the market updated by way of announcements when there are significant developments.

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CHAIRMAN’SMESSAGE

FY2016 FINANCIAL PERFORMANCE In FY2016, the Group registered a turnover of US$167.6 million, a decrease of approximately 32% compared to that registered in FY2015. The resulting gross loss stands at approximately US$48.1 million and the net loss after tax stands at US$535.2 million. This was the result of an extremely weak market demand across all our service segments which culminated in operating losses as well as severe impairment losses and write-downs of assets.

FY2016 OPERATIONAL PERFORMANCE IN FOCUS Allow me now to share with you the highlights from our business segments:-

Offshore Support and Accommodation Services DivisionThe Offshore Support and Accommodation Services Division has had a tough year. Difficult market conditions resulted in less demand throughout the year. In addition, the Offshore Support Vessel segment remains oversupplied, which is exacerbated by the fact that an increase in supply is expected to come on stream.

Nevertheless, we were able to secure US$97 million worth of contracts despite the strong headwinds faced during the financial year. These contracts have come from our core area of strength - South East Asia - as well as our increasingly established base of West Africa.

I would also like to highlight that our utilisation rate had stabilised to about 55% in FY2016. While significantly lower than it was previously when oil prices were high, it is nevertheless a commendable achievement against the backdrop of subdued demand and an oversupply of vessels. This is reflective of our focus on the importance of customer service and quality delivery. Such stability is also attributable to the continued support of our customers, which are predominantly international oil majors and national oil companies.

Offshore Production DivisionThe Offshore Production Division saw the most change as we prepared to divest our FPSOs. This has been the strategy we adopted since the formation of EMAS Offshore. However, given that we have built up considerable experience in the provision of project management and value-added services in the offshore production segment, we are regrouping ourselves to evaluate potential opportunities and explore the possibility of offering services to the offshore O&G sector which would require a similar skillset and experience.

ACCOLADESOver the course of FY2016, EMAS Offshore won a number of accolades from various clients in recognition of its safety and environment track record, as well as awards to EMAS on-shore and on-board vessel management teams for meeting our clients’ KPIs.

Among these achievements, there are a few notable ones from charterers that I wish to highlight. The first is the Nine Years Goal Zero Award which we received from Shell Philippines for achieving

safety performance standards based on Zero Lost Time Injury and meeting Shell’s Goal Zero target. Shell Philippines also awarded us with a certificate of recognition, where the crew of the vessel Lewek Leopard were acknowledged for their contribution towards saving the lives of two persons from a sinking tourist boat.

The other is a Silver Award from PTTEP, Thailand’s national petroleum exploration and production company, achieved as a result of safety and operational excellence in 2015 in relation to the charter of the vessel, Lewek Sapphire.

At this point, I wish to commend the operations team for their steadfast commitment to safety and quality delivery, and congratulate them on their achievements.

OUTLOOKThe coming years bear uncertainty and we can continue to expect increased volatility in the O&G industry. While recent oil prices have shown some initial signs of recovery, any hopeful sentiments within the offshore O&G services sector would likely remain muted as we have yet to see any significant pick-up in activities in the industry. It is contemplated that that would only happen when oil majors start to significantly increase their capex and drilling activities.

As a Group, we will adopt a conservative approach in managing our operations and financials. I would like to assure you that the Board and senior management are fully focused and committed to the ongoing restructuring efforts to deleverage our balance sheet and continue our operations, as well as to reduce overheads so that we remain viable and competitive in the long run, and eventually resume trading of the Company’s shares which have been suspended since March 2017.

IN GRATITUDEAt the management level, we have seen some changes. Mr Jason Goh stepped down as our Chief Financial Officer and we welcomed onboard Mr Hsu Chong Pin, who has since replaced Mr Goh in January 2016. Mr Hsu joins the Company with a wealth of experience in the areas of corporate finance, financial management, business development and investor relations, given his prior exposure to the offshore sector and related fields.

Let me end by thanking my Board, senior management, and staff for their commitment and hard work over the past financial year. To our stakeholders, including our shareholders, I would also like to assure you that we are working earnestly in seeking a comprehensive solution with our creditors, including banks and vendors, and with their continued support, we can overcome this severe downturn and emerge as a stronger enterprise moving forward.

Lee Kian SooExecutive Chairman

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BOARD OFDIRECTORS

MR. LEE KIAN SOO

EXECUTIVE CHAIRMAN

Mr. Lee is one of the founders of the Ezra Group and a pioneer of the offshore oil and gas industry in Singapore. With more than 40 years’ experience in the marine and offshore support services industry, Mr. Lee brings a wealth of experience and expertise into his role as Executive Chairman of EOL to assist in building the business. Apart from his responsibilities as a board member, he is actively involved in the Company’s business development. Prior to founding the Ezra Group, he worked in various shipyards. Mr. Lee holds a Second Mate Certificate of Competency.

CAPT. ADARASH KUMAR A/L CHRANJI LAL AMARNATH

CEO AND EXECUTIVE DIRECTOR

Capt. Kumar is our CEO and Executive Director. He was appointed to the Board as Non-Independent, Non-Executive Director on 26 Aug 2014, and re-designated as an Executive Director on 1 May 2015. He was appointed CEO on 25 Sep 2015. Capt. Kumar has over 35 years of experience in the marine industry. Capt. Kumar started his career with Malaysian International Shipping Corporation in 1979 where he held various positions on board vessels during his tenor with the company till 1992. He was an assistant general manager with Bumi Armada Navigation Sdn Bhd, an offshore support services provider based in Malaysia, from 1993 to 2002 where he was responsible for its operations. Capt. Kumar is a qualified Master Mariner and holds a Certificate of Competency as Master of a Foreign Going Ship issued by the Malaysian Marine Department.

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BOARD OFDIRECTORS

MR. CUTHBERT (CHAS) I.J. CHARLES

INDEPENDENT NON-EXECUTIVE DIRECTOR

Mr. Charles has over 30 years of experience in the oil and gas (upstream) industry with experience in the United Kingdom, United States, Singapore and India. He joined Halliburton in 1975, where he worked at and retired in 2008. From 2001 to 2005, Mr. Charles was Regional Vice President for Halliburton in Asia Pacific; from 2005 to 2008, he was Vice President for Halliburton in India, before his retirement in 2008. Mr. Charles is a Chartered Mechanical Engineer (London) and a Fellow of Institute of Mechanical Engineers United Kingdom.

MR. DALE BRUCE ALBERDA

INDEPENDENT NON-EXECUTIVE DIRECTOR(Stepped down as Independent Director with effect

from 28 February 2017)

Mr. Alberda has had more than 30 years of experience across various roles held in the finance and maritime sectors. He graduated in 1973 from Montana State University, Billings, with a Bachelor of Science degree in Business Administration, commencing his career as a Staff Accountant at Marine Colloids, Inc. (now a division of FMC Corporation) where he became Corporate Controller in 1976. Mr. Alberda continued his financial management career with more than 11 years with a Seattle based shipbuilder and manufacturer (Marine Construction & Design Co) including 5 years as CFO and Treasurer, before transitioning to the marine banking industry as Vice President with Christiania Bank (now part of Nordea), Key Bank, and Bank of America. More recently his experience included 11 years with Caterpillar Financial Services Corporation where, as Sales Manager in its Marine Division, he was first responsible for business development in the Asia Pacific region, and subsequently in the Europe, Africa and Middle East region.

DR. WANG KAI YUEN

INDEPENDENT NON-EXECUTIVE DIRECTOR

Dr. Wang started his career as an engineer with Radio & Television, Singapore in 1972, before commencing on PhD studies at Stanford University. In 1978, Dr. Wang joined SRI International, Menlo Park, as Senior Transportation Analyst. From 1982 to 1989, he was Deputy Director of the Institute of Systems Science where he led the research division. Dr. Wang joined Xerox Singapore Software Centre in 1989 and his last role at Xerox Singapore Software Centre was Managing Director, before retiring in December 2009. Dr. Wang is an Independent Director of Cosco Corporation (Singapore) Limited; China Aviation Oil (Singapore) Corporation Ltd; Ezion Holdings Ltd; HLH Group Limited; and ComfortDelgro Corporation Limited; all of which are companies listed on the Main Board of the SGX-ST. He holds a Bachelor of Engineering (Electrical Engineering) (Honours) from the University of Singapore; a Master of Science (Industrial Engineering); a Master of Science (Electrical Engineering); and a PhD (Engineering) from Stanford University. Dr. Wang was formerly a Member of Parliament for Bukit Timah Single Member Constituency.

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MR. HSU CHONG PINCHIEF FINANCIAL OFFICER

Mr. Hsu is responsible for the overall financial operations as well as the Group’s investor relations functions. Mr. Hsu has more than 15 years of experience within corporate finance, financial advisory, business development and investor relations across various industries including offshore oil and gas, fund management and property real estate. Most recently, prior to joining EMAS Offshore in January 2016, he was the Head of Business development & Investor Relations at a SGX-listed marine logistics group from March 2012. Mr. Hsu holds a Master of Philosophy degree in Management from Cambridge University and a Bachelor of Science Honours degree in Economics and Finance (First Class Honours) from York University, UK.

MR. DAVID MICHAEL WALLACECHIEF OPERATING OFFICER(Resigned with effect from 2 July 2017)

Prior to joining EMAS Offshore, Mr. Wallace has had over 30 years of experience in the offshore oil and gas industry. He started his career in 1979 with Halliburton Geophysical Services where he was involved in two and three dimensional data processing and data acquisition in land, marine and transition environments. Between 1995 to 1999, Mr. Wallace joined Tidewater Inc as Country Manager for the Venezuelan office; from 2000 to 2002, he was Vice President of Global Marine Logistics at Asco LLC, where he was responsible for business expansion; in 2006, Mr. Wallace was with Eastern Marine Services, a joint venture of Trico Marine Group where he initiated the start-up and Trico Marine Group’s expansion into South East Asia; and from 2011 to 2013, he was Vice President of International Operations in Hornbeck Offshore. Mr. Wallace holds a Master of Business Commerce from the University of Pretoria in South Africa, as well as a Bachelor of Science Degree from Auburn University in Alabama, the United States.

MR. RANJIT SINGHCHIEF COMMERCIAL OFFICER

Mr. Singh is responsible for business development and client relationship management of the Offshore Support and Accommodation Services division. From 1980 to 2013, he was with Swire Pacific Offshore where he held various posts and was responsible for business development and marketing vessels to offshore clients, monitoring Swire Pacific Offshore fleet, business expansion in new markets, among his other roles. From 1978 to 1980, Mr. Singh was Operations Officer at Inchcape Shipping, venturing into agency support services for several shipping lines. He has more than 40 years of experience in the marine support operations industry, starting the first six years of his career as a naval communicator with the Republic of Singapore Navy. Mr. Singh owns a Certificate of Participation in Swire Management Programme and a Certificate of Participation in INSEAD-SIRE Advanced Management Programme from INSEAD Business School. He is also an Associate Member of the Singapore Institute of Management.

MR. JOSEPH AZRAN-ALEMBERGCHIEF PROJECTS OFFICER

Mr. Azran-Alemberg is responsible for business development and managing client relationships for the Offshore Production Services division. Prior to being appointed in EMAS Offshore, he had been the General Director and Operations Manager of PVTrans Emas Co Ltd since 2010. Before PVTrans Emas Co Ltd, he was with Tanker Pacific from 2000 to 2010 where he occupied various positions - the last being the Corporate Controls & Services Manager of Tanker Pacific where he was responsible for handling all project services functions which include planning, estimation, cost control and project reporting. From 1995 to 2000, Mr. Azran-Alemberg was with Layam Ship Supplies Ltd as a Sales & Marketing Manager where he was responsible for sourcing for new suppliers locally and overseas, among his other responsibilities. He has over ten years of experience in the FPSO industry. Mr. Azran-Alemberg holds a Master’s Degree in Business Management & General Administration from the University of Haifa, Israel and a Diploma in Business Marketing from the Israeli Centre for Management. He is also a Certified NICP Project Management Professional with the National University of Singapore and PMI Institute.

MANAGEMENTTEAM

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Offshore Support and AccommodationThe Offshore Support and Accommodation Services (“Marine”) division manages and operates a fleet of advanced offshore support vessels, offering an extensive range of marine offshore oil and gas services that cater to clients’ needs throughout an oilfield’s life cycle.

For the financial year ended 31 August 2016 (“FY2016”), demand for offshore support vessels continue to be negatively impacted by the low and volatile oil price environment. In addition, the operating environment continues to be extremely challenging. Average utilisation of the offshore support fleet in FY2016 was approximately 55% but at daily charter rates which were and are expected to remain depressed.

The Company remains focused on business development opportunities in both our traditional markets of South East Asia and our increasingly established base in West Africa as well as India. The Group continued to add resources in West Africa and India to support the increased business activities.

The division secured several contract wins totalling approximately U$97 million for FY2016, despite the severe headwinds faced in the industry. Our vessel footprint stands at 78% in the Asia Pacific and 22% in West Africa exhibiting strength in our traditional markets, and as well as markets where we were focused on growing our presence.

Offshore ProductionThe Offshore Production Services (“Production”) division specialises in the provision and operations of floating, production, storage and offloading vessels (“FPSO”) systems and related services which are key assets enabling the extraction, storage and offloading of crude oil and gas from offshore hydrocarbon reservoirs. In addition, our Production division provides engineering and project management services for the conversion of FPSOs and production facilities to third party clients. The most significant development in this space is the successful divestment of PV Keez Pte Ltd (owner of the Lewek EMAS, the Floating Production Storage Offloading vessel, or FPSO) to Petrofirst Infrastructure 2 Limited which was completed in December 2016. During the time including when Lewek EMAS remained in operation, the Production division demonstrated reliable operational performance for its FPSOs, delivering steady uptime of about 98% and an excellent safety record.

DIRECTORS’ ANDMANAGEMENT REPORT

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Health, Safety and EnvironmentEMAS Offshore remains strongly committed to maintaining the highest safety standards for its entire fleet of vessels amidst these challenging times. Our team has worked effortlessly to streamline the vessel management policies and procedures with the objective of keeping them regularly updated with new regulations and also to adapt to industry best practices. Recently, EMAS Offshore has successfully aligned its quality management system to the newly revised ISO 9001:2015 standards and carried out re- certification audits demonstrating compliance with the new standard without any non-conformances. This achievement reflects EMAS dedication throughout the organization in managing quality at the core of its business processes as well as its commitment to its stakeholders, customers and partners.

The excellent strong partnerships formed with our clients and contractors have been crucial in executing each project safely and efficiently. Key processes and procedures are reviewed at the Group level to ensure they remain in line with the latest industry practices and also meet the necessary statutory requirements. Key findings are shared through regular safety meetings to staff and management visits to the vessels.

During FY2016, EMAS Offshore received a number of commendations from its clients as set out in the section “Our Awards and Recognition in FY2016”. These achievements and client recognition demonstrate EMAS’ commitment to nurturing a strong HSE culture within the organisation.

At the end of FY2016, Emas Offshore attained a new safety milestone of “5 million man-hours without any Lost Time Injury (LTI)”. Overall HSE statistics remained well within the targeted levels with zero LTI and the lowest Total Recordable Incident Rate (TRIR) recorded over the last eight years at 0.07.

We remain focused on increasing HSE awareness amongst our employees and crew, and on upholding our core values in our daily operational activities.

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The discussion below refers to the financial performance of the Group for FY2016.

RevenueRevenue for FY2016 amounted to US$167.6 million, a 32% decrease from the previous corresponding period. Shallow water platform support vessels (“PSV”) and anchor handling, towing and supply vessels (“AHTS”) continued to remain weak. These decreases were partially offset by the grossing of charter revenue following the conclusion of an agency agreement.

Gross (loss)/profit Gross loss for FY2016 amounted to US$48.1 million, as compared to a gross profit of US$29.4 million in FY2015. The decrease was mainly due to the lower revenue as compared to the previous corresponding period as cost of sales remained fairly stable and routine repair and maintenance activities continued to be carried out during the financial year.

Other (expense)/incomeIncluded in other (expense)/income, net for FY2016 was mainly due to the impairment loss on joint

ventures, an associate, available-for-sale (“AFS”) investment and property, plant and equipment.The impairment for property, plant and equipment, an associate and joint ventures of US$108.7 million, US$20.7 million and US$81.6 million respectively was due to the decline in vessel valuations across the entities. The impairment of available-for-sale investments of US$56.0 million resulted following PPTB obtaining PN17 status. In addition, US$50.2 million loss was recognised on re-measurement to fair value less costs to sell from the disposal of the associate, PV Keez Pte Ltd.

The provision for onerous contracts of US$24.2 million was mainly due to the modification of operating lease arrangements of 10 vessels. In addition, provision for put option was made for the remaining 51% stake in the joint venture SJR Marine (L) Ltd of US$20.7 million.

Loss on disposal of property, plant and equipment of US$7.4 million arose from losses from disposing vessels that entered into new sale and leaseback arrangements and vessel sale.

Included in other income, net for FY2015 was the negative goodwill arising from acquisition of EOL of US$154.7 million, gain relating to the sale

FINANCIAL PERFORMANCE

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of vessels on sale and leaseback transactions amounting to US$34.0 million and exchange rate gains of US$5.5 million due to favorable US Dollar exchange rate movements against Malaysian Ringgit, Norwegian Krone, and Singapore Dollars.

Administrative expenseAdministrative expenses for FY2016 increased by US$70.3 million from FY2015. The increase was mainly due to bad debts written off of US$67.6 million arising from the termination of the sale and leaseback transactions subsequent to financial year end. In addition, provision of US$8.5 million was made relating to the remaining outstanding receivables due from SJR Marine (L) Ltd and the allowance for doubtful debts of US$3.4 million on long overdue trade receivables. The above increases were partially offset by lower staff costs due to the decrease in headcount and the reversal of prior year’s bonus provision.

Financial incomeFinancial income was recognised mainly in relation to the interest accrued on the loan extended to an associate and the amortisation of interest income on the long term receivables. Financial income increased by 31.3% in FY2016, which was in line with the higher balance in long term receivables following the refinancing of leased vessels performed in the current financial year.

Financial expenseFinancial expense refers to interest incurred on bank loans and lease obligations. The increase in FY2016 mainly arose from finance lease arrangements for vessels, long term payable to holding company and loan drawdowns for working capital and vessels acquisition during the financial year.

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Share of results of associatesShare of results of associates decreased by 34.2% from the previous financial year as the Group ceased to share the profits of PV Keez Pte Ltd with effect from 1 March 2016, following its reclassification to assets held for sale.

Share of results of joint venturesFY2016 share of results decreased by 36.3% from the FY2015 due to the reduction in charter rates for Perisai Kamelia effected in FY2016 and share of losses in SJR Marine (L) Ltd as the vessel had remained idle for the large part of FY2016.

Income taxIncome tax relates to the amount paid or expected to be paid to the respective tax authorities. The Group has exposure to income tax in various jurisdictions. The tax rates and tax laws used to compute the amounts are those that had been enacted or substantively enacted at the end of the reporting periods. The decrease in tax expense was in tandem with the decrease in revenue in FY2016.

Consolidated Statement of Financial Position The discussion below refers to the financial position of the Group as at 31 August 2016 and 31 August 2015.

Non- Current AssetsThe Group’s total assets amounted to US$1,089.9 million as at 31 August 2016 and US$1,490.5 million as at 31 August 2015. Property, plant and equipment decreased by US$12.9 million. The decrease was mainly due to the impairment of vessels amounting to US$108.7 million, depreciation of US$55.7 million and write-off of


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deposits in respect of assets under construction amounting to US$8.7 million. This decrease was partially offset by a net increase, resulting from vessels being placed on finance lease arrangements as well as from dry-docking costs during the financial year.

Investments in joint ventures decreased by US$77.7 million, following an impairment charge of US$81.6 million arising from decline in vessel valuations. This was partially offset by the share of results of joint ventures.

Investments in associates decreased by US$93.3 million, following a reclassification of PV Keez Pte Ltd to assets held for sale and an impairment charge of US$20.7 million arising from decline in vessel valuations.

Long term receivables decreased by US$25.0 million due to the termination of bareboat charters subsequent to financial year end with impact assessed and recognised in the financial year.

Current AssetsOther receivables and deposits decreased by US$67.7 million as a result of the write-off of other receivables from previous sale and leaseback transactions and cost recovered from charterers.

Balances due from associates (net) decreased by US$31.8 million mainly due to the repayment of shareholder’s loan by an associate. Balances due from joint ventures (net) decreased by US$7.7 million mainly due to the provision of US$8.5 million relating to the remaining outstanding receivables due from SJR Marine (L) Ltd. Available for sale investment relating to shares held in PPTB was impaired in full, following the classification of PPTB under PN17. The investment in

an associate was reclassified to assets held for sale in FY2016. The amount, carried at fair value less costs to sell, amounted to US$29.6 million.

Current Liabilities The Group’s total liabilities increased by US$88.3 million to US$1,044.2 million as at 31 August 2016.

Balances due to the holding company (net) increased by US$56.4 million due to advances received. Total bank loans and bill payables were reduced by US$50.2 million, net following the repayment of two facilities in full and the scheduled repayment of principal sums. Total lease obligations and deferred income increased by US$85.6 million and US$ 24.2 million respectively due to the finance lease accounting adopted for five leased vessels.

Other payables and accruals decreased by US$50.8 million mainly due to the modifications of operating lease arrangements which resulted in the extinguishment of the option price payable. These decreases were partially offset by the cash received on the refinancing of a leased vessel.

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Corporate GovernanceThe shares of EMAS Offshore are dual-listed on Oslo Børs and SGX-ST, with Oslo Børs as our primary exchange. As companies which are primary listed on the Oslo Børs are required to relate to the corporate governance standards of Norway or their countries of incorporation, our Company has elected to relate to the Norwegian standards, set out in the Norwegian Code of Practice for Corporate Governance (the “Code”). The Code is a nonbinding recommendation as published by the Norwegian Corporate Governance Board. The Code is available at the website of the Norwegian Corporate Governance Board www.nues.no/en/. Being a company incorporated in Singapore and dual listed on Oslo Børs and SGX-ST, certain practices may deviate from certain recommendations of the Code due to different practices and principles observed by Singapore public listed companies.

The Company will provide explanations of non-compliance if the recommendations are not fully adhered to. Please refer to the Corporate Governance Report section for more details.

RiskThe Group is exposed to various known and unknown risks and uncertainties. These uncertainties and risks could

develop into actual events that could materially and adversely affect our business or financial conditions, the results of our operations or our prospects. These uncertainties and risks could include, among others:

Changes in financial markets Changes in the level of support from capital providers,

vendors and suppliers Changes in socioeconomic environments The availability of substitute services The competitive nature of the offshore oil and gas industry Oil and gas prices Oil and gas demand Improvements in technology Changes in local and foreign government regulations Changes in economic conditions or political events The inability of the Group to obtain financing for potential

new builds or to maintain existing assets on favourable financing terms

Changes in the spending plans of our customers Changes in the Group’s operating expenses, including crew

wages, insurance, dry-docking, repairs and maintenance Redeployment risks


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The Group is exposed to a number of financial risks including but not limited to credit risk, liquidity risk, foreign currency risk and interest rate risks. It is the policy of the Group to continuously monitor and review these risks and take the necessary steps to minimize the potential effects of these risks on the Group’s performance.

Although some factors might be outside our control, as described above, the Group is actively managing any possible operational risk that could arise, through continuous improvements to the current business operational workflow, processes, practices and activities.

Outlook The global offshore oil and gas industry continues to experience significant challenges in light of the current oil price environment. Although crude oil prices have recovered slightly following OPEC’s recent announcement to cut oil production, they are still significantly below their peak about two years ago. Oil majors still remain cautious in their outlook and capital expenditure. Consequently, the muted O&G spending over the past year is unlikely to rebound strongly in the near term, and delays in new contract awards across the offshore support services segment is likely to continue.

As a result, EMAS Offshore is likely to continue to experience depressed charter rates and/or vessel utilisation under the current market conditions, which will likely have a negative impact on the Group’s financial performance.

The Group will continue to execute on its plans to improve operational efficiency and overall fleet utilization, as well as dispose of non-core assets. As at the date of publication of this annual report, the financing restructuring efforts are still ongoing and the Company will keep the market updated when there are significant developments. In addition, the Group is continuing to right-size its operations, as well as to reduce overheads to ensure viability and competitiveness in the long run.

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Basis of Preparation As at 15 January 2018, the Company has entered into a binding term sheet with a potential investor for the injection of an aggregate amount of US$50 million into the Company (“Investment”) as part of the financial restructuring of the Group (“Restructuring”), and subject to the completion of the Investment and the successful restructuring of its liabilities, there are reasonable grounds for the FY2016 Financial Statements to be prepared under the assumption of going concern. Further details on the Investment and the Restructuring can be found at note 40 of the notes to the FY2016 Financial Statements.

Statement In the opinion of the directors and the executive management,

On the assumption of going concern as the basis of preparation, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company as set out on pages 44 to 127 are drawn up in accordance with the provision of the Singapore Companies Act, Cap.50 and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 August 2016, and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year then ended.

The directors’ and management report set out in the Annual Report include a true and fair review of information required under the Norwegian Securities Act Section 5- 5 second paragraph.

On Behalf Of The Directors,

Mr. Lee Kian SooExecutive Chairman

On Behalf Of The Executive Management,

Capt. Adarash Kumar A/L Chranji Lal AmarnathCEO and Executive Director


19


20

WE REMAIN FOCUSED ON INCREASING HSE AWARENESS AMONGST OUR EMPLOYEES AND CREW, AND ON UPHOLDING OUR CORE VALUES IN OUR DAILY OPERATIONAL ACTIVITIES.

20

”

”

21


OUR AWARDS AND RECOGNITION IN FY2016

NINE YEARS GOAL ZERO AWARD

Awarded Nine years safety performance based on Zero LTI & meeting SHELL Goal Zero target.

CLIENT : SPEX VESSEL : LEWEK ROBIN & LEWEK LEOPARD (SHARED CONTRACT PERIOD)

SILVER AWARD ACHIEVING GOAL ZERO IN YEAR 2015

One year (Y2015) safety & operational excellence award for vessel Lewek Sapphire.

CLIENT : PTTEP VESSEL : LEWEK SAPPHIRE

BRONZE AWARD LEAGUE TABLE – 3RD POSITION

League table award is given to EMAS on-shore &on-board management teams for meeting the client KPI’s. Lewek Lynx was awarded 3rd position amongst 19 contractors.

CLIENT : SHELL SARAWAK VESSEL : LEWEK LYNX

ONE YEAR GOAL ZERO AWARD FOR YEAR 2015

Awarded One year safety performance based on Zero LTI & for meeting SHELL Goal Zero target.

CLIENT : SHELL SARAWAK VESSEL : LEWEK LYNX

SEPTEMBER 2015

MARCH 2016

MAY 2016

AUGUST 2016

MARCH 2016

APRIL 2016

JULY 2016

BRONZE AWARD SAFETY PERFORMANCE YEAR 2015

Award is given to EMAS on-shore & on-board management teams for meeting client’s KPIs and safety performance.

CLIENT : CPOC VESSEL : BAYU MALLARD

CERTIFICATE OF RECOGNITION FORCREW RESCUE OF TOURIST BOAT

Lewek Leopard crew received recognition from SHELL Philippines for their contribution in saving the lives of 2 persons from a sinking tourist boat.

CLIENT : SPEX VESSEL : LEWEK LEOPARD

BEST SAFETY PERFORMANCE

Lewek Snipe was awarded as Best performing vessel in Q3/2015 by SHELL Brunei. Performance is based on operation and safety excellence during the evaluation period.

CLIENT : SHELL BRUNEI VESSEL : LEWEK SNIPE

22

CORPORATESTRUCTUREAs at 31 August 2017

EMAS OFFSHORE LIMITED

Lewek Chancellor Shipping Pte Ltd

100%, Singapore

Lewek Canopus Shipping Pte Ltd

100%, Singapore

EMASHoldings Pte Ltd

100%, Singapore

Emas Offshore Construction & Production Pte Ltd

100%, Singapore

Emas Offshore Production Services (Vietnam) Pte Ltd

100%, Singapore

Emas Offshore Services Pte Ltd

100%, Singapore

Lewek LB1 Shipping Pte Ltd

100%, Singapore

Emas Offshore (Labuan) Bhd

100%, Lubuan

Emas Offshore (Thailand) Ltd

99.99%, Thailand

Tunis Oil Pte. Ltd.

100%, Singapore

EMAS Offshore (NY) Inc.

100%, United States of America

Lewek Conqueror (BVI) Ltd

100%, British Virgins Islands

Lewek Castor Shipping Pte Ltd

100%, Singapore

Victoria Production Services Sdn Bhd

49%, Malaysia

Lewek Alphard Shipping Pte Ltd

100%, Singapore

Emas Victoria (L) Bhd

49%, Malaysia

SJR Marine (L) Ltd

49%, Malaysia

Lewek Altair Shipping Private Limited

100%, India

Post FY 2016 Updates:

Bayu Intan Offshore Sdn Bhd issued a notice of strike-off on 27 October 2016

EMAS Offshore (US) LLC was incorporated on 13 February 2017 and ceased on 10 May 2017

EMAS Offshore (NY) Inc. was incorporated on 20 February 2017

Lewek Champion Shipping Pte Ltd was placed under liquidation on 14 July 2017

Emas Offshore Services (B) Sdn Bhd was granted a Court Order for winding up on 7 September 17

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Emas Offshore Services Nigeria Limited

100%, Nigeria

Lewek Antares Shipping Pte Ltd

100%, Shipping

LewekAries Pte Ltd

100%, Singapore

Lewek Shipping Pte Ltd

100%, Singapore

Emas Offshore Pte Ltd

100%, Singapore

Emas Offshore (M) Sdn Bhd

100%, Malaysia

Aries Warrior DIS

99%, Norway

Lewek Crusader Shipping Pte Ltd

100%, Singapore

Lewek Ruby Shipping Pte Ltd

100%, Singapore

Emas Offshore Services (Aust) Pty Ltd

100%, Australia

Bayu Emas Maritime Sdn Bhd

100%, Malaysia

Emas Offshore Services (M) Sdn Bhd

100%, Malaysia

Emas Offshore Services (B) Sdn Bhd

100%, Brunei

GenesisOffshore Sdn Bhd

100%, Malaysia

Emas Offshore Services (Philippines) Inc.

40%, Philippines

Intan Offshore Sdn Bhd

47.26%, Malaysia

AriesWarrior AS

100%, Norway

1%1.

74%


24

CORPORATEDIRECTORYDIRECTORS

MR. LEE KIAN SOO

Executive Chairman

CAPT. ADARASH KUMAR A/L CHRANJI LAL AMARNATH

CEO And Executive Director

MR. CUTHBERT (CHAS) I.J. CHARLES

Independent Non-Executive Director

DR. WANG KAI YUEN

Independent Non-Executive Director

MR. DALE BRUCE ALBERDA

Independent Non-Executive Director(Stepped down with effect from 28 February 2017)

COMPANY SECRETARY

MR. SHANNON ONG(Appointed with effect from 15 July 2016)(Resigned with effect from 28 August 2017)

MR. YEO KENG NIEN (Resigned with effect from 15 July 2016)

REGISTERED OFFICE

51 Shipyard RoadSingapore 628139Website: www.emasoffshore.com

AUDITORS

ERNST & YOUNG LLP

One Raffles QuayNorth Tower Level 18Singapore 048583

PARTNER-IN-CHARGE

Mr. Shekaran Krishnan (Appointed since Financial Year ended 31 August 2015)

SHARE REGISTRAR

DNB BANK ASA

Dronning Eufemias Gate 300191 Oslo Norway

BOARDROOM CORPORATE & ADVISORY SERVICES PTE. LTD.

50 Raffles Place#32-01 Singapore Land TowerSingapore 048623

PRINCIPAL BANKERS

CHINATRUST COMMERCIAL BANK CO. LTD

8 Marina View, #33-01 Asia Square Tower 1 Singapore 018960

DBS BANK LTD

12 Marina BoulevardLevel 46Marina Bay Financial Centre Tower 3Singapore 018982

OVERSEA-CHINESE BANKING CORPORATION LIMITED

65 Chulia StreetOCBC CentreSingapore 049513

RHB BANK BERHAD

90 Cecil Street #01-00 RHB Bank Building Singapore 069531

UNITED OVERSEAS BANK LIMITED

80 Raffles Place UOB Plaza Singapore 048624

1


Financial Contents

026 Corporate Governance Report 036 Directors’ Statement041 Independent Auditor’s Report 044 Statements of Financial Position 046 ConsolidatedStatementofProfitorLoss

and Other Comprehensive Income048 Statements of Changes In Equity 050 Consolidated Statement of Cash Flows053 Notes to the Financial Statements128 Statistics of Shareholdings129 Notice of Annual General Meeting

Attendance/Proxy Form

26

CORPORATE GOVERNANCE

1. IMPLEMENTATION AND REPORTING ON CORPORATE GOVERNANCE

The shares of EMAS Offshore are dual-listed on Oslo Børs and SGX-ST, with Oslo Børs as our primary exchange. As companies which are primary listed on the Oslo Børs are required to relate to the corporate governance standards of Norway or their countries of incorporation, our Company has elected to relate to the Norwegian standards, set out in the Norwegian Code of Practice for Corporate Governance (the “Code”). The Code is a nonbinding recommendation as published by the Norwegian Corporate Governance Board. The Code is available at the website of the Norwegian Corporate Governance Board www. nues.no/en/. Being a company incorporated in Singapore and dual listed on Oslo Børs and SGX-ST, certain practices may deviate from certain recommendations of the Code due to different practices and principles observed by Singapore public listed companies.

The Company will provide explanations of non-compliance if the recommendations are not fully adhered to.

The Board of Directors agrees that the interests of the Company and the Shareholders shall be regarded as a whole andshallbe reflectedthroughout theCompany’soperationsandstrategies. Inadditiontocommercialconsiderations,decisions taken by EMAS Offshore should be made on the basis that the company has a responsibility for the general advancementofsociety,isobligatedtomaintainandwherepossible,preservetheenvironmentforthebenefitofthenextgeneration, and is committed to the safety, well-being and development of its employees. This approach is encouraged in all employee dealings with existing clients, potential customers and suppliers, and which are in accordance with reasonable andfairmarketpractices.TheCompanyremainscommittedtofulfillingitsresponsibilitieswithregardtocorporatesocialresponsibility (“CSR”). The four CSR focus areas of EMAS are: corporate governance, caring for its employees, environment sustainabilityandsociallybeneficialcauses.EMAShasbeenanactivememberof“greenpledge”withSingaporeportauthorities and is also engaged in various community support efforts.

The Board and the executive management are committed towards preventing corruption in their dealings. All Group employees are required to adhere to the ‘Ethics and Business Conduct Standards’ which was implemented in 2012.

2. BUSINESS

The Group’s business is to own, operate and lease offshore support, accommodation, pipe laying and construction vessels, aswellasfloatingproductionunitsandrelatedservices,targetedattheoffshoreoilandgasindustryasdefinedinclause3 of the Company’s Memorandum of Association (“MOA”).

The MOA Clause 3 also sets out other business objectives which are not currently performed by the Company. The Company has decided to continue to maintain these activities within its objectives as it will allow the Company to have therequiredflexibilitytocapitaliseonopportunitiesassociatedwiththeGroup’sbusiness.

3. EQUITY AND DIVIDENDS

The Board and the management team continually evaluate the Company’s equity capital requirements, and will take further steps, if necessary, to ensure that the equity capital is at a level which is suitable in light of the Company’s objectives, strategyandriskprofile.

According to Article 121 of the Company’s Articles of Association, the Company may declare annual dividends with the approval of our Shareholders in a general meeting, but the amount of such dividends shall not exceed the amount recommended by our Directors. Our Directors may also, in accordance with Singapore law and Singapore practices, declare an interim dividend without seeking Shareholders’ approval. As such, any distribution of interim dividend is not subject to the prior approval of theshareholdersandnojustificationisthusrequiredinthisregard.TheCompanyisconsequentlynotfullycompliantwiththeCodewhichrecommendsthatanymandatetotheBoardtodistributeinterimdividendsshouldbejustified.

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Subject to and in accordance with the provisions of the Singapore Companies Act, the Company may, pursuant to a resolution by the General Meeting, authorise the Directors to purchase or otherwise acquire ordinary shares issued by it onsuchtermsastheCompanymaythinkfitandinthemannerprescribedbytheSingaporeCompaniesAct.Indealingsinvolving the Company’s shares, the Directors will consider the equal treatment objective as further detailed in section 4 below.

In considering the form, frequency and amount of future dividends, if any, our Directors will take into account various factors, including but not limited to:

– The level of our cash and retained earnings;– Ourexpectedfinancialperformance;and– The projected levels of capital expenditure and other investment plans.

Investors should note that the intention to recommend the aforesaid dividends should not be treated as a legal obligation of the Company. In determining any future dividend distribution, consideration will be given to maximise Shareholders’ value.TheCompanyiscurrently,andhasforthepastyear,beenexperiencingfinancialdifficultieswhichindicatesthattheCompany presently, and for the foreseeable future, may not be in position to distribute any dividends.

In accordance with Singapore law and Singapore practices, the Company may, at every Annual General Meeting, seek the following mandates from Shareholders:

(i) To issue new shares at any time, and upon such terms and conditions, and for such purposes, and to such person, astheDirectorsmayintheirabsolutedescriptiondeemfit;providedthat:

(a) The aggregate number of shares to be issued to new Shareholders does not exceed 20% of the issued share capital of the Company; and

(b) The aggregate number of shares to be issued on pro-rata basis to existing Shareholders does not exceed 50% of the issued share capital of the Company.

(ii) To purchase ordinary shares of the Company not exceeding in aggregate 10% of the issued and paid-up capital of the Company, at such price as may be determined by the Directors of the Company from time to time, up to a maximum price in accordance with the Singapore Companies Act.

These mandates, if approved by Shareholders, will be in force until the conclusion of the next Annual General Meeting. The next Annual General Meeting is required by the Singapore Companies Act, Chapter 50, to be held once in every calendar year and not more than 15 months from the preceding Annual General Meeting. Singapore law does not require aSingaporecompanytohavespecificpurpose limitedauthorisationsto increasethesharecapital.TheCompanyhaschosen to comply with normal practice in Singapore and accordingly deviates from the part of the Code section 3 stating thatmandatesgrantedtotheboardtoissuesharesshouldberestrictedtodefinedpurposes.Theboardwillhoweveronacasebycasebasisevaluatewhetherspecificauthorisationshouldbeobtainedwherethecircumstancessurroundingtheshare capital increase would require extra attention from the shareholders.

4. EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH CLOSE ASSOCIATES

The Company has only one class of shares. All the shares have equal voting rights. The Articles of Association place no restriction on voting rights.


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Singapore law does not provide pre-emptive rights for shareholders in connection with the issuance of new shares. Accordinglynojustificationfordeviationfrompre-emptiverightsisrequiredunderSingaporelaw.Totheextentthatpre-emptiverightshavenotbeengiventotheshareholders,nojustificationhasbeengiventothiseffect.TheCompanyisaccordingly not in full compliance with the Code section 4. The Company is however subject to and adheres to the general principle of equal treatment of shareholders under the Norwegian Securities Trading Act section 5-14 and accordingly shallnottreatitsshareholdersinadifferentialmannerwhichcannotbejustifiedinthecommoninterestofthecompanyand the shareholders. Under Singapore law, any issuance of shares requires the prior approval of the general meeting.

When carrying out transactions in the Company’s own shares, the Board will consider the equal treatment obligation under the Norwegian Securities Trading Act section 5-14 and also the recommendation in section 4 of the Code which states that transactions should be carried out through the stock exchange or at prevailing stock exchange prices if carried out in another way. If there is limited liquidity in the Company’s shares, the Company shall consider other ways to ensure equal treatment of all shareholders.

IntheeventofmaterialtransactionsbetweentheCompanyandadirector,officer,shareholderoranyrelatedpartytosuchperson, the Board will, in accordance with section 4 of the Code, consider to obtain a third party independent valuation of the transaction. Such transactions shall be disclosed in accordance with the continuing obligations applicable to the Companyasalistedissuerandbedulyrecordedinthenotestothefinancialstatements.

Thedirectors,officersandleadingpersonneloftheCompanyareinstructedtonotifytheBoardshouldtherebeanyformof material direct or indirect dealings in the contracts that the Company is entering into, and directors are further required to declare any shareholding, directorship, executive position and interests, in other companies.

5. FREELY NEGOTIABLE SHARES

The Company’s shares are freely negotiable. The Articles of Association place no restriction on negotiability.

6. GENERAL MEETINGS

At all times, the Board will disseminate the notice of a general meeting to all Shareholders, registered in the VPS (the Norwegian Central Securities Depository, “Verdipapirsentralen”) and the Central Depository of Singapore Exchange SecuritiesTradingLimited,withatleast14days’noticeinwritingpriortotheactualmeetinginaccordancewithArticle51 of the Company’s Articles of Association. If a special resolution is to be passed at the meeting, then at least 21 days’ notice in writing is required. The Company is accordingly not in full compliance with the Code which recommends that the notice of the general meeting is made available no later than 21 days prior to the date of the general meeting. The notice is accompanied by explanatory statements in respect of the proposed resolutions. Forms for the appointment of a proxy and the relevant information on the procedure for representation will also be provided. To participate, a Shareholder is normally requested to notify DNB Bank ASA (being the Company’s registrar in the VPS) or Boardroom Corporate & Advisory ServicesPte.Ltd.(beingtheCompany’sregistrarinSingapore)notlessthan48hourspriortothemeeting.Shareholdersmay participate in person or through a proxy. Shareholders holding shares through the VPS will need to obtain a proxy from DNB Bank ASA to attend the general meeting in person. This is in line with normal practice for non-Norwegian companies having their shares registered in the VPS in the form of depositary receipts.

The Board and the chairperson of the meeting will arrange for the general meeting to vote separately on each candidate nominated for election to the Company’s Board.

If the Annual General Meeting is to be held in Singapore or another predetermined country, the facilitation for teleconference or other electronic medium can be arranged upon request. The Board is present at the Company’s general meetings. The Auditor will be present when the annual accounts are resolved.


29


The Chairman of the Board will preside over the general meeting in accordance with normal practice in Singapore. There is a preference by most shareholders for the Chairman to take charge of the meeting as the individual is deemed to be most well informed of the Company’s activities. In an event where an independent Chairman is preferred by the majority of shareholders, the Company will seek to re-evaluate its practice.

7. NOMINATING COMMITTEE

The Code recommends that the Company establishes an independent Nominating Committee which deviates from normal practice in Singapore. In accordance with Singapore practices, the Company established a Nominating Committee (“NC”) as a sub-committee of the Board, comprising board members who are independent of the main Shareholders of the Company. As such, the Board is of the view that the composition of the NC serves the interest of our Shareholders in general.TheestablishmentofaNCisfurthermorenotreflectedintheCompany’sArticlesofAssociationasitisgovernedby the terms of reference of NC. Nevertheless, the Company will make constant evaluations to the requirement of an independent NC.

The NC will execute the following:

(a) Make recommendations to the Board on all board appointments, including re-nominations, taking into consideration the director’s contribution and performance;

(b) Conduct regular evaluations on the structure, size, and composition of the Board, and make necessary adjustments if required;

(c) IdentifyandnominatecandidatestofillBoardvacancieswhenrequiredandcarefullymapoutsuccessionplans,particularly,withregardstotheChairmanandChiefExecutiveOfficer.

(d) To conduct annual reviews of directors’ independence. If a director is found to have business dealings or relationships that could potentially interfere with his independent decision-making or judgment, when the business relationships are in fact considered independent, the NC should make full disclosure of the nature of the director’s relationship and assume responsibility for the concurrence of his independence;

(e) Ensure adherence to guidelines set to promote voluntary rotation by directors who are retiring. Directors are also encouraged to submit themselves for re-election at least once every three years;

(f) Determine if a director’s performance is aligned with the Company’s policies and strategies and if the director has acted duly if he has multiple board representations;

(g) Establish procedures to determine the Board’s performance and propose a system to make evaluations and comparisons for the Board’s accomplishment against industry standards; and

(h) Coordinate all communications with the Board to produce the required report meant for the shareholders.

These guidelines have been adopted by the Company’s general meeting. In addition to the above, the NC will in its work to propose candidates engage in discussions with the Board, the CEO and shareholders. The NC will also provide for shareholders to propose candidates to the NC.

The remuneration of the Board members is also determined by a separate committee, the Remuneration Committee (“RC”). The RC is also a sub-committee of the Board, comprising Board members who are independent of the main Shareholders of the Company. Its functions are further described in Section 11 and 12.

8. CORPORATE ASSEMBLY AND BOARD OF DIRECTORS: COMPOSITION AND INDEPENDENCE

Under Singapore law, there is no legal requirement for public companies to establish a corporate assembly, and accordingly no such assembly has been established for the Company.


30

For thefinancial year ended31August 2016, TheBoardof directors consistedof five individuals, threeofwhomareindependent of the executive management of the Company and its main business associates. Three members are independent of the main shareholder. As of 31 August 2016, the Board comprised of:

Mr.LeeKianSoo (ExecutiveChairman)Capt.AdarashKumarA/LChranjiLalAmarnath (ExecutiveDirectorandCEO)Mr. Cuthbert (Chas) I.J. Charles (Independent Non-Executive Director)Dr.WangKaiYuen (IndependentNon-ExecutiveDirector)Mr. Dale Bruce Alberda (Independent Non-Executive Director)

Mr.LeeKianSooisadirectorofEzraHoldingsLimited(“Ezra”),thecontrollingshareholderoftheCompanyandamaterialbusiness contact. The Board will in its dealings with Ezra make relevant measures to ensure an independent consideration by the Board in accordance with the recommendation of the Code section 4.

Mr.LeeKianSooandCapt.AdarashKumarA/LChranjiLalAmarnathareexecutivedirectorsandaccordinglydeemedpartoftheCompany’sexecutivemanagement.TheappointmentsofMr.LeeandCapt.Kumarhavebeenmadeinordertotap on their expertise and experience in the offshore support services industry. This represents a deviation from the Code which recommends that no members of management should be represented on the Board.

Forthefinancialyearended31August2016,atotaloffourBoardmeetingswereheld.

Please refer to the table below for the attendance of the Board:

Name of Director Attendance In-Person Teleconference

Mr.LeeKianSoo 4 0

Capt.AdarashKumarA/LChranjiLalAmarnath 4 0

Mr. Cuthbert (Chas) I.J. Charles 4 0

Dr.WangKaiYuen 4 0

Mr. Dale Bruce Alberda 1 3

The members of the Board are elected at the general meeting by Shareholders. Article 91 of the Company’s Articles of Association states that all Directors will be have to be re-elected at least once every three years (the standard term for directors on the board of public listed companies in Singapore). This represents a deviation from the Code which recommends that directors should not be appointed for a longer term than two years. As the Company is incorporated in Singapore and dual listed on the SGX-ST, the Company has elected to comply with normal practice in Singapore in relation to the term of appointment for members of the board of directors. The Chairman is elected by the Board in accordance with article 104(A) of the Company’s Articles of Association and the normal practice in Singapore. The Company is accordingly not in full compliance with the Code which recommends that the Chairman is elected by the general meeting. Taking into account the nature and scope of the Company’s operations, the Company will ensure through internal policies that the BoardwillcompriseofindividualsfromdiversebackgroundstoprovideefficientguidanceandexpertisetotheCompany.

PleaserefertotheBoardofDirectorssectionfortherelevantbackgroundandproficienciesofeachmemberoftheBoard.


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9. THE WORK OF THE BOARD OF DIRECTORS

The Board will work together to provide direction for the Group and is principally responsible for the achievement of long term value and yield for Shareholders. The Board adopts an annual meeting and activity plan that covers strategic planning, business issues and oversight activities. The management team of the Company will pursue the goals and execute the plans and strategy set out by the Board.

The following describes the roles of the Board:

(a) Provide entrepreneurial leadership and ensure management team’s leadership is of the highest quality and integrity;(b) Set,review,andapprovecorporatestrategicaims,whichinvolvefinancialobjectivesanddirectionsoftheGroup,and

ensurethatthenecessaryfinancial,human,andrelevantresources,areinplacefortheGrouptomeetitsobjectives;(c) Establish goals for management, review and monitor the performance, and achievement of these goals;(d) Establish a framework of prudent and effective controls which enables risk to be assessed and managed; and(e) Set the Group’s values and standards and ensure that the obligations to Shareholders and others are understood and

met.

Internal guidelines have also been put in place to ascertain issues which require Board approval. The types of material transactions that require such approval from the Board are as follow:

(a) Approve annual budgets;(b) Approve major transaction proposals which include funding, merger, acquisition, incorporation of new subsidiaries

and disposal transactions;(c) Approve quarterly and annual results announcements and audited accounts;(d) Approve material announcement;(e) Convene meeting for shareholders; and(f) Declaration of interim dividends and proposed annual dividends.

Since 2007, three sub-committees have been assisting the Board with the execution of its duties. The three sub-committees are namely: Remuneration Committee (“RC”), Nominating Committee (“NC”), and Audit Committee (“AC”). ThesecommitteeshavetheirfunctionsclearlydefinedbytheBoardandoperatingproceduresarereviewedregularly.Therole of the NC is described in Section 7.

Forthefinancialyearended31August2016,theRC,NCandACconsistofMr.Cuthbert(Chas)I.J.Charles,Dr.WangKaiYuenandMr.DaleBruceAlberda.AllthemembersoftheRCandtheACareboardmembersconsideredtobeindependentof the Company’s Management and also meet the requirements of the Code as regards independence.

The RC reviews and recommends to the Board in consultation with the Chairman of the Board, a framework of remuneration anddetermines thespecific remunerationpackagesand termsofemployment foreachof theDirectors.TheRCalsorecommends to the Board, the remuneration package and employment terms for the Management of the Company and other employees. These recommendations will then be approved by the Board.

TheACsupervisesthefinancialreportingprocessoftheCompanyandalsomonitorstheeffectivenessoftheCompany’sinternal control and risk management systems. The AC has regular contact with the external auditor regarding the annual accounts, and also reviews and monitors the independence of the external auditor.

New Directors appointed to the Board will be briefed on their duties and responsibilities. They are also advised on the Group’s business activities, its strategic direction, and regulatory environments in which the Group operates.


32

10. RISK MANAGEMENT AND INTERNAL CONTROL

An Enterprise Risk Management (ERM) function facilitates the implementation of the Enterprise Risk Management (ERM)Frameworkovertheidentification,prioritisation,assessment,managementandmonitoringofkeyrisks.Throughthis Framework, risk capabilities and competencies are continuously enhanced. The risk management process in place covers,interalia,financial,operationalandcompliancerisksfacedbytheGroup.Thekeyrisksidentifiedaredeliberatedby Management, with the support of the ERM function, and reported to the Board on a quarterly basis. The Board reviews the adequacy and effectiveness of the ERM Framework against leading practices in risk management and vis-à-vis the external and internal environment which the Group operates in.

Complementing the ERM framework is a Group-wide system of internal controls, which includes Crisis Management, Business Continuity and Disaster Recovery plans, risk transfer through insurance, code of conduct, documented policies and procedures, proper segregation of duties, approval authorities as well as checks and balances built into the business processes. The implementation of these controls is checked by the Internal Audit department and regularly reviewed by the Audit Committee in the Ezra Group.

The Board ensures that the Company has satisfactory internal control procedures to manage exposure to risks related to theconductof theCompany’sbusiness, to support thequalityof itsfinancial reportingand toensurecompliancewith laws and regulations. Such procedures and systems shall contribute to securing investment from Shareholders’ and fundingfromfinancialinstitutionsfortheexpansionofthebusiness.

Aspartoftheannualstatutoryauditonfinancialstatements,theexternalauditorsreporttotheAC,andtheappropriatelevelofmanagementonanymaterialweaknessesinfinancialcontrolsovertheareas,whicharesignificanttotheaudit.

For the financial year ended 31August 2016, the Internal Audit function ismanaged by an in-house Internal AuditTeam. They review the effectiveness of the key internal controls, including financial, operational, and compliancecontrols.Proceduresareinplaceforinternalauditorstoreportindependentlytheirfindingsandrecommendationstothe AC. The Internal Audit department’s primary reporting is to the AC Chairman on audit matters, and to the CFO on administrativematters.TheACapprovesthehiring,removal,evaluationandcompensationoftheHeadofInternalAudit.The Internal Audit Team is guided by the International Standards for the Professional Practice of Internal Auditing set bytheInstituteofInternalAuditors(IIA).Anauditplanforthenextfinancialyearhasbeendevelopedusingastructuredrisk assessment framework.

Inrelationtothefinancialyearended31August2016,theBoardhasreceivedassurancesfromtheCEOandCFO(a)thatthefinancialrecordshavebeenproperlymaintained;and(b)regardingtheeffectivenessoftheCompany’sriskmanagementand internal controls is adequate in its material aspects.

The system of internal controls provides reasonable, but not absolute, assurance that the Company will not be adversely affected by any event that could be reasonably foreseen as it strives to achieve its business objectives.

However,theBoardnotesthatnosystemofinternalcontrolscouldprovideabsoluteassuranceinthisregard,orabsoluteassurance against the occurrence of material errors, poor judgment in decision-making, human errors, losses, fraud or other irregularities.

Whistle-blowing Policy

The Group is committed to a high standard of ethical conduct and has in place whistle-blowing procedures and arrangements by which employees may report and raise any concerns on possible wrongdoings such as suspected fraud, corruption, dishonest practices or other similar matters in good faith and are protected from reprisal to the extent possible.


33


All concerns raised through the whistleblowing email account ([email protected]) are received by Internal Audit who will assess the actions required. All whistleblowing cases and their assessments are reported by Internal Audit to the AC Chairman and the Vice-Chairman of the Company. They will decide whether further action or review is required, and if so, whether this should be conducted by an internally appointed Board of Inquiry or external authority. All employees have a duty to cooperate with investigations initiated under this Policy. The whistle-blowing procedure is posted on the Company’s intranet for staff’s easy reference and as part of the Group’s efforts to promote fraud control awareness.

11. REMUNERATION OF THE BOARD OF DIRECTORS

The Company’s general meeting determines the Board’s remuneration on the basis of recommendations from the Company’s RC. Remuneration should be reasonable and based on the Board’s responsibilities, work, time invested, and thecomplexityof thebusiness.Thesuggested remuneration to theBoard inFY2016will remainunchanged fromtheprevious year.

Save in respectof theexecutivedirectors,noneof thedirectorshave takenspecificassignments for theCompany inaddition to their board appointment.

Section 11 of the Code recommends that the remuneration of the Board is not linked to the performance of the Group. The Company has in place a share option scheme for the Board and the Management. The Company believes that remuneration that is linked to the Group’s performance will provide an alignment of interests, which the Company believes are in the best interest of its shareholders.

12. REMUNERATION OF KEY MANAGEMENT

The main function of the RC is to determine the remuneration package and employment terms for the Management of the Company. The Code recommends that the principles for remuneration of executive personnel are presented to the shareholders. Under Singapore law, no such requirement exists. The Company has elected to adhere to standard practices for Singapore companies and accordingly deviates from the Code in this respect.

In setting the remuneration package, the RC takes into consideration the wage and employment conditions within the industry and comparable companies. The Group may engage external remuneration specialists to study and recommend acomprehensiverewardsystemfortheKeyManagement,basedonsuitablebenchmarksandpractices,toensureexternalcompetitiveness and alignment with the Company’s strategy and longer term plans.

As part of its review, the RC ensures that performance-related elements of remuneration form part of the total remuneration packageof theKeyManagement.The review isalsodesigned toalign theKeyManagement’s interestswith thoseofShareholders, and link rewards to shareholder value creation over time, together with corporate and individual performance.

PleaserefertothefollowingtablefortheremunerationpackageoftheKeyManagementpersonnelforthefinancialyearended 31 August 2016:


34

Band Breakdown of the remuneration

Above

US$500,000

US$250,001 to

US$500,000Up to

US$250,000

Salary & CPF

%Fee%

Bonus%

Other Benefits

%Total

%

Name of Directors

Mr.LeeKianSoo x 82.7 0.0 9.1 8.2 100.0

CaptAdarashKumarA/LChranjiLalAmarnath x 75.8 0.0 6.3 17.9 100.0

Mr. Cuthbert (Chas) I. J. Charles x 0.0 100.0 0.0 0.0 100.0

Dr.WangKaiYuen x 0.0 100.0 0.0 0.0 100.0

Mr. Dale Bruce Alberda1 x 0.0 100.0 0.0 0.0 100.0

Name of Key Management Personnel

Mr.HsuChongPin2 x 86.2 0.0 0.0 13.8 100.0

Mr. David Michael Wallace3 x 70.1 0.0 0.0 29.9 100.0

Mr. Ranjit Singh x 69.5 0.0 5.6 24.9 100.0

Mr. Azran Alemberg Joseph x 67.5 0.0 4.4 28.1 100.0

Mr.GohHsengWeiJason4 x 75.5 0.0 11.8 12.7 100.0

Mr. Jonathan Michael Dunstan5 x 62.2 0.0 0.0 37.8 100.0

1 Mr. Dale Bruce Alberda stepped down as Independent Director with effect from 28 February 20172 Mr.HsuChongPinwasappointedwitheffectfrom26January20163 Mr. David Michael Wallace resigned with effect from 2 July 20174 Mr.GohHsengWeiJasonsteppeddownasCFOwitheffectfrom26January2016andresignedwitheffectfrom29February20165 Mr. Jonathan Michael Dunstan stepped down as CEO with effect from 25 September 2015 and resigned with effect from 29 February 2016

13. INFORMATION AND COMMUNICATION

The Company places great emphasis on ensuring that Shareholders and the market in general receive rapid, relevant and,asobjectiveaspossible,informationabouttheCompany.Simultaneousnotificationisanimportantprincipleinourstrategy for information dissemination. Our goal is for Shareholders to have a good understanding of the Company’s activities so that they are in the best possible position to evaluate the Company’s underlying value. The information is primarily disseminated via the Company’s quarterly and annual reports as well as various presentations for investors in general. Being accessible to analysts is one of the Company’s priorities. All reports, press releases, presentations and investor relations contact personnel are available on our website: www.emasoffshore.com. All investor-related queries canalsobedirectedtoinvestor_relations@emasoffshore-cnp.com.TheCompany’sfinancialcalendarisavailableonthewebsite of the Company and the Company’s ticker on Oslo Børs.


35


14. TAKE-OVERS

TheCompanyismorethan50%owedbyonecontrollingshareholder,EzraHoldingsLimited.TheBoardhasnotpreparedgeneral guidelines for how it will act in the event of a take-over. If any such situation should arise, the Board will assess the situation on a case by case basis under due consideration of the recommendations of the Code and its other obligations towards its shareholders as a listed company.

The Company will comply with all applicable statutory regulations should take-over bids occur and work to amalgamate the best interests of the Company and its Shareholders. Take-overs are regulated by the Singapore Take-over Code. The Norwegian take-over code does not apply to the Company.

The Board is responsible for ensuring that all the Company’s shareholders are treated equally and that operations are not disruptedunnecessarily.TheBoardhasaresponsibilitytoensurethatshareholdersaregivensufficientinformationandtime to form a view of the offer. The Board will not seek to hinder or obstruct take-over bids for the Company’s activities or shares unless there are particular reasons for this.

15. AUDITORS

ErnstandYoungLLPwasappointedastheCompany’sexternalauditorforthefinancialyearended31August2016.The Board has delegated all matters in connection with the audit to the AC.

As part of the audit, the auditor is required to submit audit plans, highlighting key risk areas, and any new and potential changes in the accounting principles to be reviewed by the AC. Subsequently, recommendations are made to the Board for approval.

The AC has met with the Management and the external auditor once annually to review the external audit plans submitted. Also, as part of its statutory audit on financial statements, the auditor reports to the AC aswell as the appropriateManagementpersonnel,anymaterialweaknessesintheinternalcontrolsoverareaswhicharesignificanttotheaudit.TheinternalauditoralsoreportstheinternalcontrolfindingstotheACatleastannually.Basedonthediscussionswiththeinternalauditfunction,externalauditorandtheManagement,theBoardissatisfiedwiththeinternalcontrolsoftheGroupthroughoutthefinancialyear.Asatthedateofthisreport,theinternalcontrolsareadequatetosafeguarditsassetsandensureintegrityofitsfinancialstatements.

TheAChasmetwiththeexternalauditorwithoutthepresenceoftheKeyManagement.

It is the policy of the Group to seek non-audit related services from a firm other than the Group’s auditor, except for instances whereby, the provision of services by the auditor is more cost-efficient, and timely, and also does not impair independence.

TheAChasreceivedannualwrittenconfirmationfromtheauditorthattheauditorcontinuestosatisfytherequirementsfor independence. In addition, the AC has reviewed the volume of non-audit services provided to the Group by the external auditorandissatisfiedthatthenatureandextentofsuchserviceswillnotprejudicetheindependenceandobjectivityofthe external auditor.

Theauditor’s feesforFY2016amountedtoUS$152,000.Consultancyfeeswhichrelatetoaccountingandtax-relatedissuesforFY2016amountedtoUS$$43,000.


36

ThedirectorsarepleasedtopresenttheirstatementtothememberstogetherwiththeauditedconsolidatedfinancialstatementsofEMASOffshoreLimited(the“Company”)anditssubsidiaries(collectively,the“Group”)andthestatementoffinancialpositionand statement of changes in equity of the Company for the financial year ended 31 August 2016 (the “FY2016 FinancialStatements”).

1. OPINION OF THE DIRECTORS

In the opinion of the directors,

(a) theconsolidatedfinancialstatementsoftheGroupandthestatementoffinancialpositionandstatementofchangesinequityoftheCompanyaredrawnupsoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31August2016andofthefinancialperformance,changesinequityandcashflowsoftheGroupandthechangesinequityoftheCompanyforthefinancialyearendedonthatdate;and

(b) at the date of this statement, the Company has entered into a binding term sheet with potential investors for the injectionofanaggregateamountofUS$50million into theCompany (“Investment”)aspartof thefinancialrestructuring of the Group (“Restructuring”), and subject to the completion of the Investment and the successful Restructuring, there are reasonable grounds for the FY2016 Financial Statements to be prepared under theassumption of going concern. Further details on the Investment and the Restructuring can be found at note 40 of thenotestotheFY2016FinancialStatements.

2. DIRECTORS

ThedirectorsoftheCompanyinofficeatthedateofthisstatementare:

Mr.LeeKianSoo (ExecutiveChairman)Capt.AdarashKumarA/LChranjiLalAmarnath (ExecutiveDirector)Dr.WangKaiYuen (Non-executiveDirector)Mr. Cuthbert (Chas) I.J. Charles (Non-executive Director)

3. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES

Exceptasdescribedbelow,neitherattheendofnoratanytimeduringthefinancialyearwastheCompanyapartytoanyarrangementwhoseobjectsare,oroneofwhoseobjectsis,toenablethedirectorsoftheCompanytoacquirebenefitsbymeans of the acquisition of shares or debentures of the Company or any other body corporate.

4. DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The following directors who held office at the end of the financial year, had, according to the register of directors’shareholdings required to be kept under Section 164 of the Singapore Companies Act, Chapter 50, an interest in shares and share options of the Company and related corporations (other than wholly-owned subsidiaries) as stated below:

DIRECTORS’ STATEMENT

37


4. DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES (CONT’D)

Direct interest Deemed interest

At 1September

2015

At 31August2016

At 21 September

2016

At 1September

2015

At 31August2016

At 21 September

2016

The Company

Ordinary shares

Dr.WangKaiYuen 75,000 75,000 75,000 – – –

Capt.AdarashKumarA/LChranjiLalAmarnath 164,000 164,000 164,000 – – –

Ultimate holding company

Ezra Holdings Limited

Ordinary shares

Mr.LeeKianSoo 45,390,800 45,390,800 45,390,800 – – –

Capt.AdarashKumarA/LChranjiLalAmarnath 8,203,592 8,392 8,392 – – –

Mr. Dale Bruce Alberda 20,800 20,800 20,800 – – –

Related company

Triyards Holdings Limited

Ordinary shares

Mr.LeeKianSoo 1,505,000 1,505,000 1,505,000 – – –

Capt.AdarashKumarA/LChranjiLalAmarnath 788,807 788,807 788,807 – – –

ByvirtueofSection7oftheSingaporeCompaniesAct,Chapter50,Mr.LeeKianSooisdeemedtohaveaninterestinalltherelatedcorporationsoftheCompanyfromthestarttotheendofthefinancialyear.

Exceptasdisclosedinthisstatement,nootherdirectorwhoheldofficeattheendoffinancialyearhadinterestsinshares,shareoptionsordebenturesoftheCompanyorofrelatedcorporations,eitheratthebeginningorattheendofthefinancialyear.


38

5. SHARE OPTIONS

In 2007, the shareholders approved the EOC Employee Share Option Scheme (“EOC ESOS”) for the granting of non-transferable options that are settled by physical delivery of the ordinary shares of the Company, to directors and key employees of the Company.

The EOC ESOS will be administered by the EOC Remuneration Committee, or such other committee comprising directors duly authorised and appointed by the Board of Directors, which will decide the provisions and terms and condition of each grant.

There are no share option schemes for other corporations in the Group.

(a) Options to take up unissued shares

Duringthefinancialyear,nooptionstotakeupunissuedsharesoftheCompanyweregranted.

(b) Options exercised

Duringthefinancialyear,therewerenosharesoftheCompanyissuedbyvirtueoftheexerciseofanoptiontotakeup unissued shares.

(c) Unissued shares under option

Attheendofthefinancialyear,therewerenounissuedsharesoftheCompanyunderoption.

6. EMPLOYEE SHARE PLAN

The Company implemented the Employee Share Plan (the “Plan”) with the approval of shareholders at the Extraordinary General Meeting held on 22 August 2014. The Plan shall continue to be in force up to a maximum of ten years from 22 August2014.ThisPlangivestheflexibilitytoeitherallotandissuenewsharesorpurchaseanddeliverexistingtreasuryshares upon the vesting of awards.

Participants will receive fully paid shares free of charge, upon the Participant satisfying the criteria set out in the Plan. The vesting period for the shares granted is three years. The number of shares to be allocated to each participant will be determined at the end of the performance period based on the level of attainment of the performance targets and the prevailing market price of the Company’s share at grant date.

The Remuneration Committee is responsible for administering the share option and employee share plan. At the date of this statement, the members of the Remuneration Committee are as follows:

Mr. Cuthbert (Chas) I.J. Charles (Chairman)Dr.WangKaiYuen

As at date of this statement, no shares have been granted under the Plan for performance period ended 31 August 2016.


39


7. AUDIT COMMITTEE

The Audit Committee (“AC”) comprises two board members, all of whom are non-executive directors. The members of the AC at the date of this statement are:

Dr.WangKaiYuen(Chairman)Mr. Cuthbert (Chas) I.J. Charles

The Company has adopted the Best Practices Guide and the Code of Corporate Governance 2012 in relation to the roles and responsibilities of the AC. The AC performed the following functions:

(a) reviewed the audit plans of the internal and external auditors of the Company and the co-operation given by the Company’s management to the external and internal auditors;

(b) reviewed the internal auditor’s evaluation of the adequacy of the Group’s system of internal accounting controls;

(c) reviewedtheannualfinancialstatementsandtheindependentauditor’sreportontheannualfinancialstatementsoftheGroupandthestatementoffinancialpositionandstatementofchangesinequityoftheCompanybeforetheirsubmission to the Board of Directors;

(d) met with the external auditor, other committees, and management in separate executive sessions to discuss any matters that these groups believe should be discussed privately with the AC;

(e) met with the external auditor to discuss the results of their examinations;

(f) reviewedlegalandregulatorymattersthatmayhaveamaterialimpactonthefinancialstatements,relatedcompliancepolicies and programmes and any reports received from regulators;

(g) reviewed the independence and objectivity of the external auditor;

(h) reviewed the nature and extent of non-audit services provided by the external auditor;

(i) recommended to the Board of Directors the external auditor to be nominated and reviewed the scope and results of the audit;

(j) reviewed actions and minutes of the AC to the Board of Directors with such recommendations as the AC considers appropriate;

(k) reviewed interested person transactions; and

(l) reviewed the budget for the Group before its submission to the Board of Directors.

Apartfromtheabovefunctions,theACwillcommissionandreviewthefindingsofinternalinvestigationsintomatterswhere there is suspicion of fraud or irregularity, or failure of internal controls or infringement of any law, rule or regulation, whichhasorislikelytohaveamaterialimpactontheGroup’soperatingresultsand/orfinancialposition.Intheeventthata member of the AC is interested in any matter being considered by the AC, he will abstain from reviewing that particular transaction or voting on that particular resolution.


40

7. AUDIT COMMITTEE (CONT’D)

Duringthefinancialyearended31August2016, theAChasheldsix(6)meetings.TheACreviewedandapprovedthequarterlyfinancialannouncementspriortorecommendingtheirreleasetotheBoard,asapplicable. InterestedpersontransactionsoftheGroupduringthefinancialyearhavealsobeenreviewedbytheAC.TheAChasbeengivenfullaccesstoand obtained the co-operation of the Company’s management. The AC has reasonable resources to enable it to discharge its functions properly.

The AC has met with the internal and external auditors without the presence of the management. The AC has met with the internal auditors independently to discuss on the results of their examinations and their evaluation of the system of internal accounting controls. The AC also met with the external auditor to discuss the results of their examinations relevantfortheirfinancialstatementsattestationpurposes.

TheAChasreviewedthenon-auditservicesrenderedtotheGroupbytheexternalauditor,andbeingsatisfiedthatthenature and extent of such services will not prejudice the independence and objectivity of the external auditor, is pleased to recommend their re-appointment.

Further details regarding the AC are disclosed in the Corporate Governance Report.

8. AUDITOR

Ernst&YoungLLPhaveexpressedtheirwillingnesstoacceptre-appointmentasauditor.

On behalf of the Board of Directors,

Mr.LeeKianSooDirector

Capt.AdarashKumarA/LChranjiLalAmarnathDirector

Singapore8 December 2017


41


REPORT ON THE FINANCIAL STATEMENTS

We were engaged to audit the accompanying financial statements of Emas Offshore Limited (the “Company”) and itssubsidiaries (the “Group”), which comprise the balance sheets of the Group and the Company as at 31 August 2016, income statements, statements of comprehensive income and statements of changes in equity of the Group and the Company and the consolidatedcashflowstatementoftheGroupfortheyearthenended,andasummaryofsignificantaccountingpoliciesandother explanatory information.

Management’s Responsibility for the Financial Statements

Managementisresponsibleforthepreparationoffinancialstatementsthatgiveatrueandfairviewinaccordancewiththeprovisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for devisingandmaintainingasystemof internalaccountingcontrolssufficienttoprovideareasonableassurancethatassetsare safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recordedasnecessarytopermitthepreparationoftrueandfairfinancialstatementsandtomaintainaccountabilityofassets.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance toSingapore Standards on Auditing. Because of the matters described in the Basis for Disclaimer of Opinion paragraph, however, wewerenotabletoobtainsufficientappropriateauditevidencetoprovideabasisforanauditopinion.

Basis for Disclaimer of Opinion

1. Use of the going concern assumption

AsdisclosedinNote2.1tothefinancialstatements,theGroupandtheCompanyhavereportedalossofUS$535,240,000andUS$254,612,000fortheyearandwereinnetcurrent(liabilities)/assetspositionof(US$678,907,000)andUS$79,941,000asat31August2016,respectively.Inaddition,thecashflowsoftheGrouphasbeenextremelychallengingandtheGrouphasnotbeenpayingitsprincipalandintereststofinancialinstitutionsaswellasbareboatcharterpaymentstoitslessors.TheGrouphasalsoreceivedvariouslettersofdemandfromvendors,financialinstitutionsandlessors.Theseconditionsindicate theexistenceofmaterialuncertainties thatmaycastsignificantdoubtabout theGroup’sand theCompany’sability to continue as a going concern.

The financial statements have been prepared using the going concern assumption as the Directors are of the viewthat the Group and the Company will be able to successfully complete the restructuring exercise as discussed in Note 40(iv)toenabletheGrouptomeetitsliabilitiesasandwhentheyfalldue.However,weareunabletoobtainsufficientappropriateevidencetoconcludewhethertheuseofgoingconcernassumptiontopreparethethesefinancialstatementsisappropriateastheoutcomeofthefinancialrestructuringexercisehasyettobeconcludedsatisfactorilyatthedateofthesefinancialstatementsandisinherentlyuncertain.

If the Group and the Company are unable to continue in operational existence for the foreseeable future, the Group and the Company may be unable to discharge its liabilities in the normal course of business and adjustments may have to be made toreflectthesituationthatassetsmayneedtoberealisedotherthaninthenormalcourseofbusinessandatamountswhichcoulddiffersignificantlyfromtheamountsatwhichtheyarecurrentlyrecordedinthebalancesheet.Inaddition,theGroup and the Company may have to reclassify its non-current assets as current assets. No such adjustments have been madetothesefinancialstatements.

INDEPENDENT AUDITOR’S REPORTForthefinancialyearended31August2016

42

Auditor’s Responsibility (cont’d)

Basis for Disclaimer of Opinion (cont’d)

2. Carrying amount of assets

The balance sheet of the Group and the Company includes the following classes of assets as at 31 August 2016:

Carrying amount

Group Company

US$’000 US$’000

Property, plant and equipment (Note 4) 742,943 —

Investment in subsidiaries (Note 6) — 27,917

Investment in associates (Note 7) 17,116 —

Investment in joint ventures (Note 8) 103,943 103,392

Longtermreceivables(Note9) 12,634 —

Other receivables (Note 12) 136,922 343,680

Managementhasmadevariousassumptionsandexercisedsignificantjudgementsindeterminingthecarryingamountsof assets. The key ones relate to:

– The reasonableness of the recoverable amount of the vessels under property, plant and equipment. This requires judgment regarding future charter rates, charter periods and vessel utilization for value in use assessment. Further, in instances where the recoverable amount is determined based on fair value less cost of disposal, management has assessed that the fair values of vessels, as determined by independent professional valuers, are appropriate. However,giventhematerialuncertaintiesoverthegoingconcernoftheGroupandtheCompany,wewereunableto determine the reasonableness and appropriateness of the carrying values of these assets recognized in these financialstatements.

– The recoverable amounts of investments in subsidiaries, associates and joint ventures are determined based on the adjusted net assets value of these investments. This takes into account the fair values of the underlying vessels intherespectiveentities.However,wewereunabletodeterminethereasonablenessoftheserecoverableamountsin view of the disclaimer opinions and emphasis of matter considerations relating to going concern considerations expressed by the auditors of these entities as discussed in more details in the respective notes.

– As discussed more fully in Note 9 and Note 12, the carrying amounts of both long term and other receivables is based onmanagement’sjudgmentaboutthesuccessfulconclusionofthefinancialrestructuringexerciseandtheabilityofrelatedpartiestorepayonatimelybasisandrecoveryofreceivablesfromlessors.Asatthedateofthesefinancialstatements, the outcome of the financial restructuring exercise has yet to be concluded satisfactorily and therecoverability of the amounts due from related parties and long term receivables are predicated on the satisfactory completion of the restructuring exercise as discussed in the respective notes.

Wehavenotbeenabletoobtainsufficientandappropriateauditevidenceforustoobtainreasonableassuranceonthecarrying amounts for the above classes of assets. Consequently, we are also unable to determine whether any adjustments to the impairment loss recorded for the year and to the carrying values of the abovementioned assets are required.


43


Auditor’s Responsibility (cont’d)

Basis for Disclaimer of Opinion (cont’d)

3. Completeness of liabilities and provisions

Asatthedateofthesefinancialstatements,theconclusionofsomeoftheeventsafterreportingperiodasdisclosedinNote40tothefinancialstatementsremainsuncertain.Upontheirconclusion,theymightrequiresignificantadjustmentstotheliabilitiesandprovisionsrecognisedinthesefinancialstatementsasat31August2016.

Wehavenotbeenabletoobtainsufficientappropriateevidencetoascertainiftheliabilitiesandprovisionsrecordedasat 31 August 2016 are complete. As a result, we are unable to determine whether any adjustments might be necessary in respectofthesefinancialstatementsforthefinancialyearended31August2016.

In view of the matters set out in the preceding paragraphs, we are unable to determine the appropriateness, completeness andaccuracyofthefinancialstatements,norareweabletoquantifytheextentoffurtheradjustmentsthatmightbenecessaryinrespectofthesefinancialstatementsoftheGroupandthebalancesheetoftheCompanyforthefinancialyear ended 31 August 2016.

Disclaimer of Opinion

BecauseofthesignificanceofthemattersdescribedintheBasisforDisclaimerofOpinionparagraphabove,wehavenotbeenabletoobtainsufficientandappropriateauditevidencetoprovideabasisforanauditopinion.Accordingly,wedonotexpressanopiniononthesefinancialstatements.

Report on Other Legal and Regulatory Requirements

Inouropinion, inviewofthesignificanceofthemattersreferredto intheBasisforDisclaimerofOpinion,weareunabletoreport on whether the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore have been properly kept in accordance with the provisions of the Act.

Ernst&YoungLLPPublic Accountants andChartered AccountantsSingapore8 December 2017


44

(Amounts expressed in United States dollars)

Group Company

Note 2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

ASSETS

Non-current assets

Property, plant and equipment 4 742,943 755,887 – –

Investments in subsidiaries 6 – – 27,917 153,299

Investments in associates 7 17,116 110,384 – –

Investments in joint ventures 8 103,943 181,622 103,392 148,364

Longtermreceivables 9 12,634 37,591 – –

Leasereceivables 11 1,222 – – –

Total non-current assets 877,858 1,085,484 131,309 301,663

Current assets

Inventories and work-in-progress 10 1,764 6,262 – –

Leasereceivables 11 592 – – –

Trade receivables 12 16,471 33,155 – –

Other receivables 12 136,922 276,942 343,680 344,072

Prepayments 14,165 17,292 1,206 1,465

Available-for-sale (“AFS”) investment 13 – 9,989 – 9,989

Cash and cash equivalents 14 12,484 61,333 362 6,307

Total current assets 182,398 404,973 345,248 361,833

Assets held for sale 15 29,597 – – –

Total assets 1,089,853 1,490,457 476,557 663,496

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

STATEMENTS OF FINANCIAL POSITIONAs at 31 August 2016

45



Group Company

Note 2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

LIABILITIES AND EQUITY

Current liabilities

Bank term loans 20 466,829 84,879 45,000 –

Trade payables 16 36,039 12,789 – –

Other payables and accruals 16 132,035 141,832 177,455 152,780

Derivativefinancialinstruments 8 20,719 – 20,719 –

Bills payable to banks 17 101,464 120,923 22,000 42,000

Deferred income 18 4,108 436 – –

Leaseobligations 19 97,002 1,188 – –

Onerous contracts 21 24,225 – – –

Income tax payable 8,481 7,820 133 115

Total current liabilities 890,902 369,867 265,307 194,895

Net current (liabilities)/assets (678,907) 35,106 79,941 166,938

Non-current liabilities

Bank term loans 20 – 412,726 – 45,000

Other payables 16 125,000 156,970 125,000 125,000

Derivativefinancialinstruments 266 404 – –

Deferred income 18 26,396 5,822 – –

Leaseobligations 19 – 10,169 – –

Deferred tax liabilities 22 1,675 11 – –

Total non-current liabilities 153,337 586,102 125,000 170,000

NET ASSETS 45,614 534,488 86,250 298,601

EQUITY

Share capital 23 229,541 235,939 357,211 357,211

Treasury shares 25 (718) (718) (718) (718)

Accumulated(losses)/profits (183,487) 351,753 (270,243) (15,631)

Translation reserve 24 (4,879) (5,233) – –

Hedgingreserve 24 – 3 – –

Fair value adjustment reserve 24 – (46,015) – (42,261)

Capital reserve 24 5,157 (1,241) – –

TOTAL EQUITY 45,614 534,488 86,250 298,601


STATEMENTS OF FINANCIAL POSITIONAs at 31 August 2016 (cont’d)

46


Group

Note 2016 2015

US$’000 US$’000

Revenue 26 167,579 247,171

Cost of sales (215,659) (217,818)

Gross (loss)/profit (48,080) 29,353

Other (expense)/income, net 27 (378,107) 192,950

Administrative expenses (97,844) (27,584)

(Loss)/profit from operations (524,031) 194,719

Financial income 30 3,482 2,651

Financial expenses 31 (27,951) (16,220)

Share of results of associates 7,645 11,616

Share of results of joint ventures 9,394 14,751

(Loss)/profit before tax 28 (531,461) 207,517

Tax 22 (3,779) (7,973)

(Loss)/profit after tax (535,240) 199,544

Attributable to:

Owners of the Company (535,240) 199,544

Non-controlling interests – *

(535,240) 199,544

(Loss)/earnings per share (US cents per share) 32

– basic (1.22) 0.47

– diluted (1.22) 0.47

* LessthanUS$1,000


CONSOLIDATED STATEMENT OF PROFIT ORLOSS AND OTHER COMPREHENSIVE INCOMEForthefinancialyearended31August2016

47



Group

Note 2016 2015

US$’000 US$’000

(Loss)/profit after tax (535,240) 199,544

Other comprehensive income:

Items that may be reclassified subsequently to profit or loss

Effectiveportionofchangesinfairvalueofcashflowhedges (3) 3

Changes in fair value of AFS investment 13 (9,989) (46,015)

Impairment on available for sale investment 13 56,004 –

Exchange difference on translation of foreign operations 431 (5,677)

Share of other comprehensive income of a joint venture (77) 77

Total comprehensive income for the financial year (488,874) 147,932

Total comprehensive income attributable to:

Owners of the Company (488,874) 147,932

Non-controlling interests – *

Totalcomprehensiveincomeforthefinancialyear (488,874) 147,932

* LessthanUS$1,000


CONSOLIDATED STATEMENT OF PROFIT ORLOSS AND OTHER COMPREHENSIVE INCOMEForthefinancialyearended31August2016

48

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49



Company

ShareCapital

(Note 23)Treasury shares

(Note 25)

Fair value adjustment

reserveAccumulated

profits/(losses)Total

equity

US$’000 US$’000 US$’000 US$’000 US$’000

Balance at 1 September 2014 94,578 – 10,832 25,838 131,248

Lossforthefinancialyear – – – (22,138) (22,138)

Other comprehensive income forthefinancialyear – – (53,093) – (53,093)

Issuance of ordinary shares pursuant to reverse acquisition 218,476 – – – 218,476

Issuance of ordinary shares pursuant to share placement 46,045 – – – 46,045

Expenses on issue of ordinary shares (1,888) – – (1,888)

Purchase of treasury shares – (718) – – (718)

One-tier tax exempt dividends of NorwegianKroner1.12pershare(Note 39) – – – (19,331) (19,331)

262,633 (718) – (19,331) 242,584

Balance at 31 August 2015 357,211 (718) (42,261) (15,631) 298,601

Lossforthefinancialyear – – – (254,612) (254,612)

Other comprehensive income forthefinancialyear – – 42,261 – 42,261

Balance at 31 August 2016 357,211 (718) – (270,243) 86,250


STATEMENTS OFCHANGES IN EQUITYForthefinancialyearended31August2016(cont’d)

50


Note

Group

2016US$’000

2015US$’000

Cash flows from operating activities(Loss)/profitbeforetax (531,461) 207,517Adjustments for:

Depreciation expense 4 55,747 45,813Property, plant and equipment written off 4 8,664 –Impairment loss on property, plant and equipment 4 108,695 –Loss/(gain)ondisposalofproperty,plantandequipment 27 7,402 (33,954)Remeasurement loss arising from step-acquisition of joint venture 27 – 6,030Realised loss/(gain) on derivative instruments 27 165 (92)Share of results of associates (7,645) (11,616)Share of results of joint ventures (9,394) (14,751)Fair value changes of derivative instruments 27 20,578 –Impairment on AFS investment 27 56,004 –Bad debts written off 28 67,608 –Bad debts recovered 27 (14) (343)Unrealised exchange loss/(gain) 2,436 (5,810)Interest expense 31 27,951 16,220Interest income 30 (3,482) (2,651)Lossrecognisedonremeasurementtofairvaluelesscoststosellonassetsheldforsale 27 50,194 –Allowance for doubtful debts, net 28 11,911 4,607Bargain purchase arising from the reverse acquisition 27 – (154,686)Bargain purchase arising from step-acquisition of joint venture 27 – (1,290)Impairment loss on joint ventures 27 81,621 –Impairment loss on an associate 27 20,686 –Impairment of goodwill 27 – 311Amortisation of deferred income 27 (1,423) –Provision for onerous contracts 21 24,225 –

Operating cash flows before movements in working capital (9,532) 55,305

Decrease/(increase) in:Inventories and work-in-progress 4,498 (2,085)Trade receivables 13,279 22,835Other debtors, deposits and prepayments 11,404 727Due from holding company 4,404 3,572Due from related companies 35,973 55,369Due from associates 1,622 (3,938)Due from joint ventures (816) (15,989)

Increase/(decrease) in:Trade payables 23,250 (10,462)Other payables and accruals (18,871) (35,285)Due to holding company 20,067 (107,450)Due to associates 7,882 2,504Due to joint ventures 103 –Due to related companies (19,021) 45,963

Cash generated from operations 74,242 11,066

Interest paid (17,680) (13,487)Interest income received 1,949 723Income taxes paid (1,456) (7,246)

Net cash flow generated from/(used in) operating activities 57,055 (8,944)

CONSOLIDATED STATEMENTOF CASH FLOWSForthefinancialyearended31August2016

51



Note

Group

2016US$’000

2015US$’000

Cash flows from investing activities

Return of capital from joint ventures 1,239 –

Receipt of loan repayment from an associate 21,385 –

Acquisition of subsidiary, net of cash paid 6 – 15,862

Purchase of property, plant and equipment A (120,388) (37,611)

Proceeds from disposal of assets held for sale – 17,750

Proceeds from disposal of property, plant and equipment B 47,645 4,240

Dividend received from a joint venture 728 –

Decrease/(increase) in cash pledged 36,416 (3,868)

Net cash flows used in investing activities (12,975) (3,627)

Cash flows from financing activities

Payment of dividends by a subsidiary to non-controlling interests – (233)

Proceeds from bills payable 1,500 5,000

Repayment of bills payable (21,500) (38,894)

Purchase of treasury shares – (718)

Proceeds from bank loans 62,616 115,747

Repayment of bank loans (93,284) (102,348)

Proceeds from issuance of placement shares, net of transaction costs – 44,157

Repayment of lease obligations (5,796) (1,282)

(Payment)/receipt of derivative instrument, net (166) 92

Net cash flows (used in)/from financing activities (56,630) 21,521

Net (decrease)/increase in cash and cash equivalents (12,550) 8,950

Effects of exchange on cash and cash equivalents 117 (644)

Cashandcashequivalentsatbeginningofthefinancialyear 24,035 15,729

Cash and cash equivalents at end of the financial year 14 11,602 24,035


CONSOLIDATED STATEMENTOF CASH FLOWSForthefinancialyearended31August2016(cont’d)

52

Notes to the consolidated statement of cash flows

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

Group

2016 2015

US$’000 US$’000

Aggregate cost of property, plant and equipment acquired 195,548 87,268

Option price payable (Note 16) – (37,720)

Purchases paid in advance (2,129) –

Purchase by way of lease obligation (73,031) (11,937)

Purchase of property, plant and equipment in cash 120,388 37,611

B. DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT, NET OF CASH RECEIVED

TheGroupdisposedcertainproperty,plantandequipmentonasaleandleasebackarrangementduringthefinancialyear.The proceeds received were calculated as follows:

2016 2015

US$’000 US$’000

Carrying amount of the property, plant and equipment (Note 4) 35,448 40,889

(Loss)/gainondisposalofproperty,plantandequipment (Note 27) (7,402) 33,954

Fair value of sales consideration 28,046 74,843

Disposal by way of lease receivables (1,760) –

Disposal by way of other receivables (3,500) –

Disposal by way of sale and leaseback arrangement 41,839 –

Amount due from a related company – (145)

Deferred consideration at amortised cost (25,018) (72,092)

Selling expenses payable 8,038 1,634

47,645 4,240


CONSOLIDATED STATEMENTOF CASH FLOWSForthefinancialyearended31August2016(cont’d)

53


1. CORPORATE INFORMATION

EMASOffshoreLimited(the“Company”) isa limited liabilitycompany, incorporatedanddomiciled inSingaporeandislistedontheOsloBørs,NorwayandtheSingaporeExchangeSecuritiesTradingLimited(“SGX-ST”).

TheregisteredofficeandprincipalplaceofbusinessoftheCompanyislocatedat51ShipyardRoad,Singapore628139.

The principal activities of the Company are those of investment holding and provision of ship management services. Theprincipalactivitiesofthesubsidiaries,associatesandjointventureareasshowninNotes6,7and8tothefinancialstatements.Therehasbeennosignificantchangeinthenatureoftheseactivitiesduringthefinancialyear.

TheimmediateandultimateholdingcompanyisEzraHoldingsLimitedwhichisincorporatedintheRepublicofSingapore.

The Group operates in Singapore, South East Asia, Australia, India, Africa and Americas.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

TheconsolidatedfinancialstatementsoftheGroupandthestatementoffinancialpositionandstatementofchangesin equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”) and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Asat31August2016,theGroupandtheCompanyhavereportedalossofUS$535,240,000andUS$254,612,000fortheyearandwereinnetcurrent(liabilities)/assetspositionof(US$678,907,000)andUS$79,941,000respectively,andhavebreachedcertainfinancialcovenantsduringthefinancialyear.Inaddition,thecashflowsoftheGrouphasbeenextremelychallenginginwhichtheGrouphasnotbeenpayingitsprincipalandintereststofinancialinstitutionsaswellasbareboatpaymentstoitslessors.TheGrouphasalsoreceivedvariouslettersofdemandfromvendors,financialinstitutionsandlessors.Assuch,theGrouphasstarteditsrefinancingdiscussionwiththevariousfinancialinstitutionstorefinanceitsfinancialobligations.TheGroupwasininitialdiscussionwithallitsfinanciallenderstorefinanceitsfinancialobligationsoveraperiodof5yearsfromDecember2016(“Refinancing”)andretrospectivelyexempttheGroupfromcomplyingwithfinancialcovenantsuntilFY2020.Theagreementalsocontemplatestheraisingofnewworkingcapitalfacilities,whichissubject to certain conditions (“Ongoing Initiatives”).

In March 2017, the Company announced that the completion of the above Ongoing Initiatives have been delayed as the ultimateholdingcompanyhadvoluntarilyfiledapetitionforreliefunderChapter11oftheUnitedStatesBankruptcyCodeto obtain the protection of the United States Bankruptcy Court while a restructuring is being pursued. Such action has impacted the completion of the Ongoing Initiatives negatively. As such, the Group is unable to complete the Ongoing Initiatives in a timely manner, and it will not be able to discharge its liabilities in the ordinary course of business hence significantlyaffectingtheGroup’sgoingconcernanditsdailyoperations.

InAugust2017,theCompanyenteredintoabindingtermsheetwithcertainpotentialinvestorsaspartofthefinancialrestructuring of the Group (“Restructuring Exercise”). The Group intends to undertake a Restructuring Exercise to restructure its existing secured and unsecured liabilities as well as any outstanding obligations and any contingent liabilities to substantially deleverage the Group and Company’s balance sheet and strengthen its working capital position to enable the Group to continue as a going concern.

NOTES TO THE FINANCIAL STATEMENTSForthefinancialyearended31August2016

54

NOTES TO THE FINANCIAL STATEMENTSFor the financial year ended 31 August 2016

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.1 Basis of preparation (cont’d)

The Restructuring Exercise is proposed to be carried out mainly by way of: (i) a scheme of arrangement under Section 210 or Section 211 of the Companies Act (Chapter 50 of Singapore) in Singapore to deal with settlement and discharge of outstanding debts (the “Scheme”); and (ii) the issuance of new shares in the Company for subscription by each of the potentialinvestors.ThetotalinvestmentamounttobemadebythepotentialinvestorsisestimatedtobeUS$50millionfor the Restructuring Exercise.

In connection with the Restructuring Exercise, the Company, together with its wholly owned subsidiaries, Emas Offshore PteLtdandEmasOffshoreServicesPteLtd(collectivelythe“Entities”),madeavoluntarilyapplicationtotheHighCourtofthe Republic of Singapore under section 211(B)(1) of the Companies Act (Chapter 50).

Pursuanttosection211B(8)of theCompaniesAct,duringtheperiodcommencingonthefilingof theapplicationandending on the earlier of 30 days after the applications are made and the date on which the applications are decided by the Court, a moratorium takes effect and no order may be made for winding up of the Entities. This will thus provide stability for the daily operations of the Group to continue with support of the key trade suppliers and allow the Entities an opportunity and adequate time to pursue the Restructuring Exercise.

Upon the completion of the Restructuring Exercise and the injection of new funds, the balance sheet of the Group and Company will be deleveraged substantially and the new funds will provide working capital support to enable the Group to continue as a going concern. The directors of the Company believed that the Group and the Company will be able to successfullycompletethefinancialrestructuringexerciseandaccordingly,thedirectorsareoftheopinionthattheuseofgoingconcernassumptioninpreparingtheaccompanyingfinancialstatementsisappropriate.

If thefinancialstatementsarepresentedona realisationbasis, thecarryingvalueof itsassetsand liabilitiesmaybematerially different. If the Group and Company is unable to continue in operational existence for the foreseeable future, the Group and Company may be unable to discharge its liabilities in the normal course of business and adjustments may have tobemadetoreflectthesituationthatassetsmayneedtoberealisedotherthaninthenormalcourseofbusinessandatamountswhichcoulddiffersignificantlyfromtheamountsatwhichtheyarecurrentlyrecordedinthebalancesheet.Inaddition, the Group and Company may have to reclassify its non-current assets as current assets. No such adjustments havebeenmadetothesefinancialstatements.

ThefinancialstatementsarepresentedinUnitedStatesDollars(“USD”or“US$”or“$”)andallvaluesareroundedtothenearestthousand(US$’000)exceptwhenotherwiseindicated.

Thefinancialstatementshavebeenpreparedonahistoricalcostbasis,exceptasdisclosedintheaccountingpoliciesbelow.

2.2 Changes in accounting policies

(a) Adoption of revised FRS and INT FRS

The accounting policies have been consistently applied by the Group and the Company and are consistent with those usedinthepreviousfinancialyear,exceptinthecurrentfinancialyear,theGroupandtheCompanyhaveadoptedallthe new and revised standards and Interpretations of FRS (“INT FRS”) that are effective for annual periods beginning on or after 1 September 2015. The adoption of these standards and Interpretations did not have any effect on the financialperformanceorpositionoftheGroupandtheCompany.

55




2.2 Changes in accounting policies (cont’d)

(b) FRS and INT FRS not yet effective

The Group and the Company have not adopted the following standards and interpretations that are applicable to the Group that have been issued but not yet effective:

DescriptionEffective for annual periods

beginning on or after

Amendments to FRS 27 Equity Method in Separate Financial Statements 1 January 2016

Amendments to FRS 16 and FRS 38: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016

Amendments to FRS 111: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016

Improvements to FRSs (November 2014)

(a) Amendments to FRS 105 Non-current Assets Held for Sales and Discontinued Operations 1 January 2016

(b) Amendments to FRS 107 Financial Instruments Disclosures 1 January 2016

(c) Amendments to FRS 19 Employee Benefits 1 January 2016

(d) Amendments to FRS 34 Interim Financial Reporting 1 January 2016

Amendments to FRS 110 & FRS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 1 January 2016

FRS 115 Revenue from Contracts with Customers 1 January 2018

FRS 109 Financial Instruments 1 January 2018

Amendments to FRS 1: Disclosure Initiative 1 January 2016

Amendments to FRS 110, FRS 112 and FRS 28: Investment Entities: Applying the Consolidation Exception 1 January 2016

FRS 116 Leases 1 January 2019

Except for FRS 115, FRS 109 and FRS 116, the directors expect that the adoption of the standards above will have no materialimpactonthefinancialstatementsintheperiodofinitialapplication.Thenatureoftheimpendingchangesin accounting policy on adoption of FRS 115, FRS 109 and FRS 116 are described below.

FRS 115 Revenue from Contracts with Customers

FRS115establishesafive-stepmodelthatwillapplytorevenuearisingfromcontractswithcustomers.UnderFRS115,revenueisrecognisedatanamountthatreflectstheconsiderationwhichanentityexpectstobeentitledinexchange for transferring goods or services to a customer. The principles in FRS 115 provide a more structured approach to measuring and recognising revenue when the promised goods and services are transferred to the customeri.e.whenperformanceobligationsaresatisfied.

Eitherafullormodifiedretrospectiveapplicationisrequiredforannualperiodsbeginningonorafter1January2018with early adoption permitted. The Group is currently assessing the impact of FRS 115 and plans to adopt the new standard on the required effective date.

56



2.2 Changes in accounting policies (cont’d)

(b) FRS and INT FRS not yet effective (cont’d)

FRS 109 Financial Instruments

FRS 109 introduces new requirements for classification and measurement of financial assets, impairment offinancial assets and hedge accounting. Financial assets are classified according to their contractual cash flowcharacteristics and the business model under which they are held. The impairment requirements in FRS 109 are based on an expected credit loss model and replace the FRS 39 incurred loss model. Adopting the expected credit losses requirements will require the Group to make changes to its current systems and processes.

FRS 109 is effective for annual periods beginning on or after 1 January 2018 with early application permitted. Retrospective application is required, but comparative information is not compulsory. The Group is currently assessing the impact of FRS 109 and plans to adopt the standard on the required effective date.

FRS 116 Leases

FRS 116 requires lessees to recognise for most leases, a liability to pay rentals with a corresponding asset, and recognise interest expense and depreciation separately. The new standard is effective for annual periods beginning on or after 1 January 2019.

The Group is currently assessing the impact of the new standard and plans to adopt the new standard on the required effective date. The Group expects the adoption of the new standard will result in increase in total assets and total liabilities.

2.3 Foreign currencies

The Group’s consolidated financial statements are presented in United States Dollars, which is also the Company’sfunctionalcurrency.EachentityintheGroupdeterminesitsownfunctionalcurrencyanditemsincludedinthefinancialstatements of each entity are measured using that functional currency.

(a) Foreign currency transactions and balances

Transactions in a currency other than the respective functional currencies (“foreign currency”) of the Company and its subsidiaries are recorded on initial recognition in the functional currencies at foreign exchange rates approximating those ruling at the dates of the transactions. Foreign currency monetary items are translated into the functional currency using foreign exchange rate ruling at the end of the reporting period. Non-monetary assets and liabilities measured at historical cost in foreign currencies are translated into the functional currency using foreign exchange rates at the dates of the transactions. Non-monetary items measured at fair value in foreign currencies are translated into the functional currency at exchange rates ruling at the dates the fair value was measured.

Exchange differences arising on the settlement of monetary items or translating monetary items at the end of the reportingperiodarerecognisedinprofitorloss.

57




2.3 Foreign currencies (cont’d)

(b) Foreign operations

Forconsolidationpurpose,theassetsandliabilitiesofoperationsaretranslatedintoUS$attherateofexchangerulingat theendof the reportingperiodandtheirprofitor lossare translatedataverageexchangerates for thefinancialyear.Theexchangedifferencesarisingonthetranslationarerecognisedinothercomprehensiveincome.On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operationisrecognisedinprofitorlossoftheGroup.

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interestandarenotrecognisedinprofitorloss.

For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share oftheaccumulatedexchangedifferencesisreclassifiedtoprofitorloss.

(c) Translation of goodwill and fair value adjustments

Goodwill and fair value adjustments arising on the acquisition of foreign entities are deemed to be assets and liabilities of the Company and continue to be recorded at the exchange rates at the respective dates of the acquisition.

2.4 Basis of consolidation and business combinations

(a) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiariesasattheendofthereportingperiod.Thefinancialstatementsofthesubsidiariesused inthepreparationoftheconsolidatedfinancialstatementsarepreparedforthesamereportingdateastheCompany.Consistentaccountingpolicies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Losseswithinasubsidiaryareattributedtothenon-controllinginterestevenifthatresultsinadeficitbalance.

58



2.4 Basis of consolidation and business combinations (cont’d)

(a) Basis of consolidation (cont’d)

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

– derecognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost;

– derecognises the carrying amount of any non-controlling interest;– derecognises the cumulative translation differences recorded in equity;– recognises the fair value of the consideration received;– recognises the fair value of any investment retained;– recognisesanysurplusordeficitinprofitorloss;and– reclassifiestheGroup’sshareofcomponentspreviouslyrecognisedinothercomprehensiveincometoprofitor

lossoraccumulatedprofits,asappropriate.

(b) Business combinations

Business combinations are accounted for by applying the acquisitionmethod. Identifiable assets acquired andliabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will berecognisedinaccordancewithFRS39eitherinprofitorlossorasachangetoothercomprehensiveincome.Ifthecontingentconsiderationisclassifiedasequity,itisnotremeasureduntilitisfinallysettledwithinequity.

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any), that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation, is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate shareoftheacquiree’sidentifiablenetassets.Othercomponentsofnon-controllinginterestsaremeasuredattheiracquisition date fair value, unless another measurement basis is required by another FRS.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree(ifany),overthenetfairvalueoftheacquiree’sidentifiableassetsandliabilitiesisrecordedasgoodwill.Theaccounting policy for goodwill is set out in Note 2.10. In instances where the latter amount exceeds the former, the excessisrecognisedasgainonbargainpurchaseinprofitorlossontheacquisitiondate.

Reverse acquisition

The acquisition of certain subsidiaries of the holding company (“Acquiring Group”) on 3 October 2014 has been accounted for as a reverse acquisition and the Acquiring Group are considered the acquirer for accounting purposes. Accordingly, theconsolidatedfinancialstatementsfor thefinancialperiodthenendedarethoseof theAcquiringGroup’sconsolidatedfinancialstatements.SincesuchconsolidatedfinancialstatementsrepresentacontinuationofthefinancialstatementsoftheAcquiringGroup:

59




2.4 Basis of consolidation and business combinations (cont’d)

(b) Business combinations (cont’d)

Reverse acquisition (cont’d)

(i) theassetsandliabilitiesoftheAcquiringGrouparerecognisedandmeasuredinthestatementoffinancialposition of the Group at their pre-acquisition carrying amounts;

(ii) theaccumulatedprofitsandotherequitybalancesrecognised in theconsolidatedfinancialstatementsaretheaccumulatedprofitsandotherequitybalancesoftheAcquiringGroupimmediatelybeforetheBusinessCombination; and

(iii) theamountrecognisedasissuedequityinstrumentsintheconsolidatedfinancialstatementsisdeterminedby adding to the issued equity of the Acquiring Group immediately before the Business Combination, less the costs of the reverse acquisition.However, the equity structure appearing in the consolidated financialstatements (i.e. thenumberandtypeofequity instruments issued) reflect theequitystructureof the legalparent,includingtheequityinstrumentsissuedbytheCompanytoreflectthereverseacquisition.

Consolidated financial statements prepared following a reverse acquisition shall reflect the fair values of theassets, liabilities and contingent liabilities of the legal parent. Therefore, the cost of the reverse acquisition for the acquisitionisallocatedtotheidentifiableassets,liabilitiesandcontingentliabilitiesofthelegalparentthatsatisfythe recognition criteria at their fair values as at 3 October 2014. The excess of the Acquiring Group’s interest in the netfairvalueofthoseitemsoverthecostofthereverseacquisitionisrecognisedasbargainpurchaseintheprofitor loss.

2.5 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjustedtoreflectthechangesintheirrelativeinterestsinthesubsidiary.Anydifferencebetweentheamountbywhichthenon-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

2.6 Subsidiaries

A subsidiary is an investee that is controlled by the Group. The Group controls an investee when it exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

IntheCompany’sseparatefinancialstatements,investmentsinsubsidiariesareaccountedforatcostlessimpairmentlosses.

60



2.7 Joint arrangements

A joint arrangement is a contractual arrangement whereby two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Ajointarrangementisclassifiedeitherasjointoperationorjointventure,basedontherightsandobligationsofthepartiesto the arrangement.

To the extent the joint arrangement provides the Group with rights to the assets and obligations for the liabilities relating to the arrangement, the arrangement is a joint operation. To the extent the joint arrangement provides the Group with rights to the net assets of the arrangement, the arrangement is a joint venture.

Joint ventures

The Group recognises its interest in a joint venture as an investment and accounts for the investment using the equity method. The accounting policy for investment in joint venture is set out in Note 2.8.

2.8 Associates and joint ventures

AnassociatesisanentityoverwhichtheGrouphasthepowertoparticipateinthefinancialandoperatingpolicydecisionsof the investee but does not have control or joint control of those policies.

The Group account for its investments in associates and joint ventures using the equity method from the date on which it becomes an associate or joint venture.

On acquisition of the investment, any excess of the cost of the investment over the Group’s share of the net fair value of theinvestee’s identifiableassetsandliabilities isaccountedasgoodwillandis includedinthecarryingamountoftheinvestment.AnyexcessoftheGroup’sshareofthenetfairvalueoftheinvestee’sidentifiableassetsandliabilitiesoverthecost of the investment is included as income in the determination of the entity’s share of the associate or joint venture’s profitorlossintheperiodinwhichtheinvestmentisacquired.

Undertheequitymethod,theinvestmentinassociatesorjointventuresarecarriedinthestatementoffinancialpositionatcostpluspost-acquisitionchangesintheGroup’sshareofnetassetsoftheassociatesorjointventures.Theprofitorlossreflectstheshareofresultsoftheoperationsoftheassociatesorjointventures.Distributionsreceivedfromjointventures or associates reduce the carrying amount of the investment. Where there has been a change recognised in other comprehensive income by the associates or joint venture, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and associate or joint venture are eliminated to the extent of the interest in the associates or joint ventures.

When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint venture, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate or joint venture.

After application of the equity method, the Group determines whether it is necessary to recognise any impairment loss on the Group’s net investment in the associate or joint ventures. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate or joint venture is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint ventureanditscarryingvalueandrecognisestheamountinprofitorloss.

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2.8 Associates and joint ventures (cont’d)

Uponlossofsignificant influenceor jointcontrolovertheassociateor jointventure,theGroupmeasurestheretainedinterest at its fair value. Any difference between the fair value of the aggregate of the retained interest and proceeds from disposalandthecarryingamountoftheinvestmentatthedatetheequitymethodwasdiscontinuedisrecognisedinprofitor loss.

2.9 Property, plant and equipment

Property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and equipment andfurnitureandfixturesaremeasuredatcostlessaccumulateddepreciationandanyaccumulatedimpairmentlossesunlessstatedotherwisebelow.Thecostincludesthecostofreplacingpartofthefixedassetsandborrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingfixedasset.TheaccountingpolicyforborrowingcostsissetoutinNote2.18.Thecostofafixedassetisrecognisedasanassetif,andonlyif,itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheGroupandthecostoftheitemcanbemeasuredreliably.The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenanceandrepairsarechargedtotheprofitorloss.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Aproperty,plantandequipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuseordisposal.Anygainorlossresultingfromderecognitionoftheassetisincludedinprofitorlossinthefinancialyearthe asset is derecognised.

Depreciationiscalculatedonastraight-linebasistowriteoffthecostoffixedassetsovertheirestimatedusefullives.Theestimatedusefullivesoffixedassetsareasfollows:

Renovations – 5 yearsAssets on board the vessels – 3 - 20 yearsMotor vehicles – 5 yearsFurniture,fittingsandofficeequipment – 3yearsPlant and machinery – 10 yearsVessels – 20 to 25 yearsDry-docking costs – 5 yearsComputers – 3 years

Vessels and assets under construction are stated at cost. These costs include all progress billings received in accordance with theconstructioncontracts, interest chargesarising fromborrowingsused tofinance theconstructionandotherdirectly attributable costs. Vessels and assets under construction are not depreciated until such time they are completed and available for operational use.

Drydocking expenses, when incurred, will be deferred and amortised on a straight-line basis over the period to the next drydocking date.

Fullydepreciatedassetsareretainedinthefinancialstatementsuntiltheyarenolongerinuseandnofurtherchargefordepreciation is made in respect of these assets.

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2.9 Property, plant and equipment (cont’d)

The useful life and depreciation method are reviewed annually to ensure that the method and period of depreciation are consistentwithpreviousestimatesandtheexpectedpatternofconsumptionofthefutureeconomicbenefitsembodiedintheitemsoffixedassets.

2.10 Intangible assets

Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less impairment losses. On disposal of a subsidiary, associates or joint venture, the attributable amount of goodwill is included in the determination oftheprofitorlossondisposal.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated totheGroup’scash-generatingunitsthatareexpectedtobenefitfromthesynergiesofthecombination,irrespectiveofwhether other assets or liabilities of the acquiree are assigned to those units.

The cash-generating unit to which goodwill have been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in profitorloss.Impairmentlossesrecognisedforgoodwillarenotreversedinsubsequentperiods.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

2.11 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to dispose and itsvalueinuseandisdeterminedforanindividualasset,unlesstheassetdoesnotgeneratecashinflowsthatarelargelyindependent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessingvalueinuse,theestimatedfuturecashflowsexpectedtobegeneratedbytheassetarediscountedtotheirpresentvalueusingapre-taxdiscount rate that reflectscurrentmarketassessmentsof the timevalueofmoneyandtherisksspecifictotheasset.Indeterminingfairvaluelesscoststodispose,recentmarkettransactionsaretakenintoaccount,ifavailable.Ifnosuchtransactionscanbeidentified,anappropriatevaluationmodelisused.Thesecalculationsare corroborated by valuation multiples or other available fair value indicators.

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2.11 Impairment of non-financial assets (cont’d)

The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculationsaregenerallycoveringaperiodoffiveyears.Forlongerperiods,along-termgrowthrateiscalculatedandappliedtoprojectfuturecashflowsafterthefifthyear.

Impairmentlossesofcontinuingoperationsarerecognisedinprofitorlossinthoseexpensecategoriesconsistentwiththe function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairmentlossbeenrecognisedpreviously.Suchreversalisrecognisedinprofitorloss.

2.12 Financial instruments

(a) Financial assets

Initial recognition and measurement

Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the financialinstrument.TheGroupdeterminestheclassificationofitsfinancialassetsatinitialrecognition.

Whenfinancialassetsarerecognisedinitially,theyaremeasuredatfairvalue,plus,inthecaseoffinancialassetsnotatfairvaluethroughprofitorloss,directlyattributabletransactioncosts.

Subsequent measurement

Thesubsequentmeasurementoffinancialassetsdependsontheirclassificationasfollows:

(i) Financialassetsatfairvaluethroughprofitorloss

Financialassetsatfairvaluethroughprofitorlossincludefinancialassetsheldfortrading.Financialassetsareclassifiedasheldfortradingiftheyareacquiredforthepurposeofsellingorrepurchasinginthenearterm.

ThiscategoryincludesderivativefinancialinstrumentsenteredintobytheGroupthatarenotdesignatedashedginginstrumentsinhedgerelationshipsasdefinedbyFRS39.Derivatives,includingseparateembeddedderivativesarealsoclassifiedasheldfortradingunlesstheyaredesignatedaseffectivehedginginstruments.TheaccountingpolicyforderivativefinancialinstrumentsandhedgingactivitiesisincludedinNote2.17.

Subsequenttoinitialrecognition,financialassetsatfairvaluethroughprofitorlossaremeasuredatfairvalue.Anygainsorlossesarisingfromchangesinfairvalueofthefinancialassetsarerecognisedinprofitorloss.Netgainsornetlossesonfinancialassetsatfairvaluethroughprofitorlossincludeexchangedifferences,interest and dividend income.

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2.12 Financial instruments (cont’d)

(a) Financial assets (cont’d)

Subsequent measurement (cont’d)

(i) Financialassetsatfairvaluethroughprofitorloss(cont’d)

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and thehostcontractsarenotmeasuredat fair valuewithchanges in fair value recognised inprofitand loss.Theseembeddedderivativesaremeasuredatfairvaluewithchangesinfairvaluerecognisedinprofitorloss.Reassessmentonlyoccursifthereisachangeinthetermsofthecontractthatsignificantlymodifiesthecashflowsthatwouldotherwiseberequired.

(ii) Loansandreceivables

Non-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarketareclassifiedasloansandreceivables.Subsequenttoinitialrecognition,loansandreceivablesaremeasuredatamortisedcostusingtheeffectiveinterestmethod,lessimpairment.Gainsandlossesarerecognisedinprofitor loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

(iii) AFSfinancialassets

AFSfinancialassetsarethosenon-derivativefinancialassetsthataredesignatedasavailable-for-saleorarenotclassifiedinanyoftheothercategories.After initialrecognition,AFSfinancialassetsaresubsequentlymeasuredatfairvalue.Anygainsorlossesfromchangesinfairvalueofthefinancialassetsarerecognisedinother comprehensive income, except that impairment losses, foreign exchange gains or losses on monetary instrumentsandinterestcalculatedusingtheeffectiveinterestmethodarerecognisedinprofitorloss.Thecumulativegainor losspreviouslyrecognisedinothercomprehensive incomeisreclassifiedfromequitytoprofitorlossasareclassificationadjustmentwhenthefinancialassetisderecognised.

Investment in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Derecognition

Afinancialassetisde-recognisedwherethecontractualrightstoreceivecashflowsfromtheassethaveexpired.

Onde-recognitionofafinancialassetinitsentirety,thedifferencebetweenthecarryingamountandthesumoftheconsideration received and any cumulative gain or loss that has been recognised in other comprehensive income is recognisedinprofitorloss.

Regular way purchase or sale of a financial asset

Allregularwaypurchasesandsalesoffinancialassetsarerecognisedorderecognisedonthetradedate,i.e.thedate that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales offinancialassetsthatrequiredeliveryofassetswithintheperiodgenerallyestablishedbyregulationorconventionin the marketplace concerned.

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2.12 Financial instruments (cont’d)

(b) Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions ofthefinancialinstrument.TheGroupdeterminestheclassificationofitsfinancialliabilitiesatinitialrecognition.

Allfinancial liabilitiesare recognised initiallyat fairvalueplus in thecaseoffinancial liabilitiesnotat fairvaluethroughprofitandloss,directlyattributabletransactioncosts.

Subsequent measurement

Themeasurementoffinancialliabilitiesdependsontheirclassificationasfollows:

(i) Financialliabilitiesatfairvaluethroughprofitorloss

Financial liabilitiesat fair value throughprofitor loss includefinancial liabilitiesheld for trading.Financialliabilitiesareclassifiedasheldfortradingiftheyareacquiredforthepurposeofsellinginthenearterm.ThiscategoryincludesderivativefinancialinstrumentsenteredintobytheGroupthatarenotdesignatedashedginginstruments inhedge relationships.Separatedembeddedderivativesarealsoclassifiedasheld for tradingunless they are designated as effective hedging instruments.

Subsequentto initialrecognition,financial liabilitiesatfairvaluethroughprofitor lossaremeasuredatfairvalue.Anygainsorlossesarisingfromchangesinfairvalueofthefinancialliabilitiesarerecognisedinprofitor loss.

(ii) Financial liabilities at amortised cost

Afterinitialrecognition,financialliabilitiesthatarenotcarriedatfairvaluethroughprofitorlossaresubsequentlymeasured at amortised cost using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through theamortisation process.

Derecognition

Afinancialliabilityisde-recognisedwhentheobligationundertheliabilityisdischargedorcancelledorexpired.

Whenanexistingfinancialliabilityisreplacedbyanotherfromthesamelenderonsubstantiallydifferentterms,orthetermsofanexisting liabilityaresubstantiallymodified,suchanexchangeormodification istreatedasade-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amountsisrecognisedinprofitorloss.

(c) Offsetting of financial instruments

Financialassetsandfinancialliabilitiesareoffsetandthenetamountispresentedinthestatementsoffinancialposition, when and only when, there is a currently enforceable legal right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

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2.13 Impairment of financial assets

TheGroupassessesateachreportingdatewhetherthereisanyobjectiveevidencethatafinancialassetisimpaired.

(a) Financial assets carried at amortised cost

Forfinancialassetscarriedatamortisedcost,theGroupfirstassesseswhetherobjectiveevidenceofimpairmentexistsindividuallyforfinancialassetsthatareindividuallysignificant,orcollectivelyforfinancialassetsthatarenotindividuallysignificant.IftheGroupdeterminesthatnoobjectiveevidenceofimpairmentexistsforanindividuallyassessedfinancialasset,whethersignificantornot,itincludestheassetinagroupoffinancialassetswithsimilarcredit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.

Ifthereisobjectiveevidencethatanimpairmentlossonfinancialassetscarriedatamortisedcosthasbeenincurred,the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimatedfuturecashflowsdiscountedatthefinancialasset’soriginaleffectiveinterestrate.Ifaloanhasvariableinterest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amountoftheassetisreducedthroughtheuseofanallowanceaccount.Theimpairmentlossisrecognisedinprofitor loss.

Whentheassetbecomesuncollectible, thecarryingamountof impairedfinancialassets is reduceddirectlyor ifan amount was charged to the allowance account, the amounts charged to the allowance account are written off againstthecarryingvalueofthefinancialasset.

Todeterminewhetherthereisobjectiveevidencethatanimpairmentlossonfinancialassetshasbeenincurred,theGroupconsidersfactorssuchastheprobabilityofinsolvencyorsignificantfinancialdifficultiesofthedebtoranddefaultorsignificantdelayinpayments.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount ofreversalisrecognisedinprofitorloss.

(b) Available-for-sale financial assets

In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i)significantfinancialdifficultyoftheissuerorobligor,(ii)informationaboutsignificantchangeswithanadverseeffectthat have taken place in the technological, market, economic or legal environment in which the issuer operates, andindicatesthatthecostoftheinvestmentinequityinstrumentmaynotberecovered;and(iii)asignificantorprolongeddecline inthefairvalueofthe investmentbelowitscosts. ‘Significant’ istobeevaluatedagainsttheoriginal cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost.

Ifanavailable-for-salefinancialassetisimpaired,anamountcomprisingthedifferencebetweenitsacquisitioncost(net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from other comprehensive income and recognised in profit or loss.Reversalsofimpairmentlossesinrespectofequityinstrumentsarenotrecognisedinprofitorloss;increaseintheirfair value after impairment are recognised directly in other comprehensive income.

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2.14 Cash and cash equivalents

Cashandcashequivalentscomprisecashonhandandatbanksandfixeddepositssubjecttoan insignificantriskofchanges in value.

2.15 Assets held for sale

Anassetisclassifiedasheldforsaleifitscarryingamountwillberecoveredprincipallythroughasaletransactionratherthan through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must be committed to the sale, which should be expectedtoqualifyforrecognitionasacompletedsalewithinoneyearfromthedateofclassification.

Immediatelybeforetheinitialclassificationoftheasset(ordisposalgroup)asheldforsale,thecarryingamountsoftheasset(oralltheassetsandliabilitiesinthegroup)aremeasuredinaccordancewiththeapplicableFRS.Uponclassificationas held for sale, non-current assets and disposal groups are measured at the lower of carrying amount and fair value less coststosell.Anydifferencesarerecognisedinprofitorloss.

Fixedassetsandintangibleassetsonceclassifiedasheldforsalearenotdepreciatedoramortised.

2.16 Inventories and work-in-progress

Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated selling price in the ordinary course of business, less anticipated cost of disposal and after making allowance for any damaged and obsolete inventories.

Costs incurred in bringing the inventories to their present location and conditions are accounted for as follows:

– Inventoriesheldfortrading:costisdeterminedonaspecificidentificationbasis.– Consumables:purchasecostsonafirst-infirst-outbasis.

Inventories comprise mainly inventories held for the Marine Services division.

Work-in-progress comprises uncompleted engineering and equipment supply contracts. It is stated at cost less progress billings. Cost comprises direct material, direct labour and other directly attributable expenses. Allowance is made for anticipated losses, if any, on work-in-progress when the possibility of loss is ascertained.

2.17 Derivative financial instruments and hedging activities

TheGroupusesderivativefinancialinstrumentssuchasforwardcurrencycontractstohedgeitsrisksassociatedwithforeigncurrencyfluctuations.Derivativefinancialinstrumentsarecarriedasassetswhenthefairvalueispositiveandasliabilities when the fair value is negative.

Anygainsorlossesarisingfromchangesinfairvalueonderivativefinancialinstrumentsthatdonotqualifyforhedgeaccountingaretakentoprofitorlossforthefinancialyear.

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts withsimilarmaturityprofiles.Thefairvalueofinterestratederivativecontractsaredeterminedbyreferencetomarketvalues for similar instruments.

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2.17 Derivative financial instruments and hedging activities (cont’d)

Hedgeaccounting

TheGroupdesignatescertainderivativesascashflowhedgeswhenthereishedgingexposuretovariabilityincashflowsthat is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transactionandcouldaffectprofitorloss.

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. Thedocumentationincludesidentificationofthehedginginstrument,thehedgeditemortransaction,thenatureoftherisk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changesinthehedgeditem’scashflowsattributabletothehedgedrisk.Suchhedgesareexpectedtobehighlyeffectiveinachievingoffsettingchangesincashflowsandareassessedonanongoingbasistodeterminethattheyactuallyhavebeenhighlyeffectivethroughoutthefinancialreportingperiodsforwhichtheyweredesignated.

The effective portionof thegain or losson thederivative financial instruments that qualify as cashflowhedgesarerecognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately intheprofitorlossin“Other(expenses)/income,net”.

Amountsaccumulatedinthehedgingreserveintheequityaretransferredtoprofitorlossintheperiodswhenthehedgeditemsaffectprofitorloss,suchaswhenthehedgedfinancialexpenseisrecognised.

If the forecast transaction is no longer expected to occur, amounts previously recognised in hedging reserve are transferred toprofitorloss.Ifthehedginginstrumentexpiresorissold,terminatedorexercisedwithoutreplacementorrollover,orifits designation as a hedge is revoked, amounts previously recognised in hedging reserve remain in equity until the forecast transactionoccurs.Iftherelatedtransactionisnotexpectedtooccur,theamountistakentoprofitorloss.

2.18 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are being incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

2.19 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it isprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationandtheamount of the obligation can be estimated reliably.

Provisionsarereviewedattheendofeachreportingperiodandadjustedtoreflectthecurrentbestestimate.Ifitisnolongerprobablethatanoutflowofeconomicresourceswillberequiredtosettletheobligation,theprovisionisreversed.Iftheeffectofthetimevalueofmoneyismaterial,provisionsarediscountedusingacurrentpretaxratethatreflects,whereappropriate,therisksspecifictotheliability.Whendiscountingisused,theincreaseintheprovisionduetothepassageoftimeisrecognisedasafinancecost.

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2.20 Leases

(a) Finance lease – when the Group is a lessee

Financeleases,whichtransfertotheGroupsubstantiallyalltherisksandbenefitsincidentaltoownershipoftheleased item, are capitalised at the fair value of the leased asset or, if lower, at the present value of the minimum lease paymentsattheinceptionoftheleasetermanddisclosedasleasedfixedassets.Anyinitialdirectcostsarealsoadded to the amount capitalised.

Leasepaymentsareapportionedbetweenthefinancechargesandreductionoftheleaseliabilitysoastoachieveaconstantrateofinterestontheremainingbalanceoftheliability.Financechargesarechargeddirectlytoprofitorloss.

Capitalised leased assets are depreciated over the shorter of estimated useful life of the asset as outlined in Note 2.9 and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

(b) Finance lease – when the Group is a lessor

Leases of assets where substantially all the risks and rewards incidental to legal ownership of the assets aretransferredbytheGrouptothelesseesareclassifiedasfinanceleases.

The lease asset is derecognised and the present value of the lease receivable (net of initial direct costs for negotiating and arranging the lease) is recognised on the balance sheet and included in “lease receivables”. The difference betweenthegrossreceivableandthepresentvalueoftheleasereceivableisrecognisedasunearnedfinanceincome.

Eachleasepaymentreceivedisappliedagainstthegrossinvestmentinthefinanceleasereceivabletoreduceboththeprincipalandtheunearnedfinanceincome.Thefinanceleaseincomeisrecognisedinprofitorlossonabasisthatreflectsaconstantperiodicrateofreturnonthenetinvestmentinthefinanceleasereceivable.InitialdirectcostsincurredbytheGroupinnegotiatingandarrangingfinanceleasesareaddedtofinanceleasereceivablesandrecognisedasanexpenseinprofitorlossovertheleasetermonthesamebasisasthefinanceleaseincome.

(c) Operating lease – when the Group is a lessee

Operatingleasepaymentsarerecognisedasanexpenseinprofitorlossonastraight-linebasisovertheleaseterm.Theaggregatebenefitofincentivesprovidedbythelessorisrecognisedasareductionofrentalexpenseoverthelease term on a straight-line basis.

(d) Operating lease – when the Group is a lessor

LeasesinwhichtheGroupdoesnottransfersubstantiallyalltherisksandrewardsofownershipoftheassetareclassifiedasoperatingleases.Assetsleasedoutunderoperatingleaseareincludedinfixedassetsandarestatedat cost less accumulated depreciation and impairment loss. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. The accounting policy for rental income is set out in Note 2.24. Contingent rents are recognised as revenue in the period in which they are earned.

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2.21 Taxes

(a) Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period, in the countries where the Group operates and generates taxable income.

Currentincometaxesarerecognisedinprofitorlossexcepttotheextentthatthetaxrelatestoitemsrecognisedoutsideprofitorloss,eitherinothercomprehensiveincomeordirectlyinequity.Managementperiodicallyevaluatespositions taken in the tax returns with respect to situations in which applicable tax regulation are subject to interpretation and establishes provisions where appropriate.

(b) Deferred tax

Deferred tax is provided, using the liability method, on temporary differences at the end of the reporting period betweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsforfinancialreportingpurposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

– Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profitnortaxableprofitorloss;and

– In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unusedtaxlosses,totheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except:

– Where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affectsneitheraccountingprofitnortaxableprofitorloss;and

– In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporarydifferenceswillreverseintheforeseeablefutureandtaxableprofitswillbeavailableagainstwhichthe temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is nolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartofthedeferredtaxassettobeutilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent thatithasbecomeprobablethatfuturetaxableprofitwillallowthedeferredtaxassettoberecovered.

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2.21 Taxes (cont’d)

(b) Deferred tax (cont’d)

Deferred taxassetsand liabilitiesaremeasuredat the tax rates thatareexpected toapply to thefinancialyearwhen the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferredtaxrelatingtoitemsrecognisedoutsideprofitorlossisrecognisedoutsideprofitorloss.Deferredtaxitemsare recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same tax authority.

Taxbenefitsacquiredaspartofabusinesscombination,butnotsatisfyingthecriteriaforseparaterecognitionatthatdate, would be recognised subsequently if new information about facts and circumstances arise. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it incurred during the measurementperiodorinprofitorloss.

(c) Sales tax

Revenue, expenses and assets are recognised net of the amount of sales tax except:

– Where the sales tax incurred on a purchase of assets or services is not recoverable from the tax authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

– Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the tax authority is included as part of receivables or payablesinthestatementoffinancialposition.

2.22 Share capital and share issuance expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of new equity shares are deducted against share capital.

2.23 Treasury shares

The Group’s own equity instruments, which are reacquired (treasury shares) are recognised at cost and deducted from equity.Nogainorlossisrecognisedinprofitorlossonthepurchase,sale,issueorcancellationoftheGroup’sownequityinstruments. Any difference between the carrying amount of treasury shares and the consideration received, if reissued isrecogniseddirectlyinequity.VotingrightsrelatedtotreasurysharesarenullifiedfortheGroupandnodividendsareallocated to them respectively.

72



2.24 Revenue recognition

RevenueisrecognisedtotheextentthatitisprobablethattheeconomicbenefitswillflowtotheGroupandtherevenuecan be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration receivedorreceivable,takingintoaccountcontractuallydefinedtermsofpaymentandexcludingtaxesorduty:

(a) Vessel charter income is recognised on a time apportionment basis in accordance to the terms and conditions of the charter agreement. Charter income is deferred to the extent that conditions necessary for its realisation have yet to befulfilled.

(b) Management fees, agency fees and fees in respect of ship management are recognised when services are rendered.

(c) Trading sales is recognised upon the passing of title to the customer which generally coincides with delivery and acceptance of the goods sold.

(d) Revenue from project management is recognised when service is rendered.

(e) Interest income is recognised using the effective interest method.

2.25 Employee benefits

(a) Pensions and other post employment benefits

TheGroupparticipates in thenationalpensionschemesasdefinedby the lawsof thecountries inwhich ithasoperations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund inSingapore,adefinedcontributionpensionscheme.Contributionstodefinedcontributionpensionschemesarerecognised as an expense in the period in which the related service is performed.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they are accrued to employees. A provision is made for the estimated liability for leave as a result of services rendered by employees up to the reporting date.

(c) Employee share plan

Employees of the Group receive remuneration in the form of share awards as consideration for services rendered. The cost of these equity-settled share based payment transactions with employees is measured with reference to thefairvalueoftheawardsatthedateonwhichtheawardsweremade.Thiscostisrecognisedinprofitorlossoverthe vesting period.

2.26 Contingent liabilities

A contingent liability is:

(a) apossibleobligationthatarisesfrompasteventsandwhoseexistencewillbeconfirmedonlybytheoccurrenceornon-occurrence of one or more uncertain future events not wholly within the control of the Group; or

73




2.26 Contingent liabilities (cont’d)

(b) a present obligation that arises from past events but is not recognised because:

(i) It isnotprobable thatanoutflowof resourcesembodyingeconomicbenefitswill be required tosettle theobligation; or

(ii) Theamountoftheobligationcannotbemeasuredwithsufficientreliability.

Acontingentassetisapossibleassetthatarisesfrompasteventsandwhoseexistencewillbeconfirmedonlybytheoccurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the statement of financial position of the Group, except forcontingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined.

2.27 Financial guarantee

Afinancialguaranteecontractisacontractthatrequirestheissuertomakespecifiedpaymentstoreimbursetheholderforalossitincursbecauseaspecifieddebtorfailstomakepaymentwhendueinaccordancewiththetermsofadebtinstrument.

Financial guarantees are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributabletotheissuanceoftheguarantee.Subsequenttoinitialrecognition,financialguaranteesarerecognisedasincomeinprofitorlossovertheperiodoftheguarantee.Ifitisprobablethattheliabilitywillbehigherthantheamountinitiallyrecognisedlessamortisation,theliabilityisrecordedatthehigheramountwiththedifferencechargedtoprofitorloss.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS

ThepreparationoftheGroup’sconsolidatedfinancialstatementsrequiresmanagementtomakejudgments,estimatesand assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingentliabilitiesattheendofeachreportingperiod.However,uncertaintyabouttheseassumptionsandestimatescould result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

(a) Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period, are discussed below. The Group based its assumptions and estimates on parameters available whenthefinancialstatementswereprepared.Existingcircumstancesandassumptionsaboutfuturedevelopments,however, may change due to market changes or circumstances arising beyond the control of the Group. Such changesarereflectedintheassumptionswhentheyoccur.

74


3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS (CONT’D)

(a) Key sources of estimation uncertainty (cont’d)

(i) Estimated useful lives of vessels

Vessels are depreciated on a straight-line basis over their estimated useful lives. The estimated useful life reflectsthemanagement’sestimateoftheperiodsthattheGroupintendstoderivefutureeconomicbenefitsfrom the use of vessels. Management has assessed that the residual value of the vessels are not material. Changes in the business plans and strategies, expected level of usage and future technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. A 4% (2015: 4%) difference in the expected useful lives of the vessels from management’s estimates would result in approximately 0.3% (2015: 0.9%) variance in (loss)/profit for thefinancialyear.

(ii) Impairment of receivables

The Group assesses at each reporting date whether there is objective evidence that receivables have been impaired. Impairment loss is calculated based on a review of the current status of existing receivables and historical collections experience. Such allowances are adjusted periodically to reflect the actual and pastexperience. As at 31 August 2016, the carrying amount of trade and other receivables of the Group amounted toUS$16,471,000andUS$136,922,000(2015:US$33,155,000andUS$276,942,000)respectively.

IncludedintheGroup’stradereceivablesisabalanceamountingtoUS$10,231,000(2015:US$7,462,000)thatisagedmorethan365days.TheGrouphasprovidedUS$7,610,000(2015:US$6,512,000)andexpectsthatthedebtors will be able to repay the remaining receivables.

Included in the Group’s other receivables are balances due from related companies and a joint venture held with PerisaiPetroleumTeknologiBhd(“PPT”)amountingtoUS$332,000andUS$8,455,000respectively.TheGrouphas commenced legal proceedings against the joint venture on 9 November 2016 to recover the receivables. The Group has provided in full the remaining amounts due from the related companies and the joint venture.

(iii) Impairmentofnon-financialassets

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to dispose and its value in use. The fair value less costs to dispose calculation is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing the asset. The value in use calculation isbasedonadiscountedcashflowmodel.Thecashflowsarederivedfromthebudget for thenextfiveyearsanddonotincluderestructuringactivitiesthattheGroupisnotyetcommittedtoorsignificantfuture investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverableamountismostsensitivetothediscountrateusedforthediscountedcashflowmodelaswellastheexpectedfuturecashinflowsandthegrowthrateusedforextrapolationpurposes.

Theimpairmentlossonproperty,plantandequipmentfortheyearamountedtoUS$108,695,000.

75





(iv) Income taxes

The Group has exposure to income taxes in numerous jurisdictions. It also enjoys tax incentives in Singapore. Significantjudgmentisinvolvedindeterminingthegroup-wideprovisionforincometaxes.Therearecertaintransactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxeswill be due. Where the final tax outcomeof thesematters is different from the amountsthat were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. As at 31 August 2016, the carrying amount of the Group’s current tax payable and deferred tax liabilitieswere US$8,481,000 (2015: US$7,820,000) and US$1,675,000 (2015:US$11,000)respectively.

(v) Impairment of investment in joint ventures and associates

An impairment exists when the carrying value of the investment in joint ventures and associates exceeds its recoverable amount. The recoverable amount is based on either valuation of the vessels owned by the joint ventures and associates as determined by independent valuation expert or based on value in use calculation usingdiscountedcashflowmodel.Thecashflowsarederivedfromthebudgetforthenextfiveyears.Therecoverableamountismostsensitivetothediscountrateusedforthediscountedcashflowmodelaswellastheexpectedfuturecashinflowsandthegrowthrateusedforextrapolationpurposes.

(vi) Provision for onerous contracts

AprovisionforonerouscontractsisrecognisedwhentheexpectedbenefitstobederivedbytheGroupfroma contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.

(vii) ContingentLiabilities

Acontingentliabilityisapossibleobligationthatarisesfrompasteventsandwhoseexistencewillbeconfirmedonly by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

WithreferencetoNote2.1andNote40,theGrouphasbreachedcertainfinancialcovenantsduringthefinancialyear, triggering event of default across the group. In addition, the Group has not been paying its principal and intereststofinancialinstitutionsaswellasbareboatpaymentstoitslessors.Thishasresultedinthereceiptofvariouslettersofdemandfromvendors,financialinstitutionsandlessors.

Contingentliabilitiesarenotrecognisedbecauseit isnotprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationandtheamountoftheobligationcannotbemeasuredwithsufficientreliability.

76




(viii) Fair value of asset held for sale

Upontheclassificationofanassetasassetheldforsale,theassetistobemeasuredatthelowercarryingamount and fair value less costs to sell. As disclosed in Note 15, the consideration for the asset held for sale comprise of a cash element and a deferred consideration. The fair value of the deferred consideration is determined using valuation technique such as monte-carlo simulation. The inputs to the model are derived from observable market data where possible, but where this is not feasible, a degree of judgement is required to establish the fair value of the deferred consideration.

(b) Critical judgments made in applying accounting policies

The following are the judgments made by management in the process of applying the Group’s accounting policies thathavethemostsignificanteffectontheamountsrecognisedinthefinancialstatements:

(i) Accounting for sale and leaseback arrangements

At the inception of the respective sale and leaseback arrangements, the Group has evaluated the substance of the transactions in accordance with the requirements of INT FRS 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease and FRS 17 (revised) Leases. The sales should be recognised upon completion of the transaction if the leaseback is accounted for as operating lease and there is no de-recognition of asset forleasebackaccountedforasfinancelease.

77



4.

PR

OP

ERTY

, PLA

NT

AND

EQ

UIP

MEN

T

Reno

vatio

ns

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ts o

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ard

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cles

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iture

, fit

tings

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d of

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equi

pmen

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ryVe

ssel

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y-do

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Com

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US$

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US$

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US$

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US$

’000

US$

’000

US$

’000

US$

’000

US$

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US$

’000

US$

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Gro

up

Cost

At 1

Sep

tem

ber

2014

855,

928

462

713,

521

630,

774

42,3

92–

130

683,

363

Addi

tions

113

2,27

2–

1–

67,1

0710

,690

7,08

41

87,2

68

Acqu

isiti

on

thro

ugh

busi

ness

co

mbi

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n4

––

––

143,

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–41

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–18

4,80

1

Disp

osal

s(1

1)–

(60)

(19)

–(4

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)–

(41)

(43,

330)

Reclassification

– F

ixed

ass

ets

––

––

–36

,980

–(3

6,98

0)–

–

Tran

slat

ion

diff

eren

ce(3

6)–

(60)

(14)

–(4

80)

––

(25)

(615

)

At 3

1 Au

gust

201

5 an

d

1 Se

ptem

ber

2015

155

8,20

034

239

3,52

183

5,30

151

,963

11,9

0165

911,

487

Addi

tions

4

451

–

––

175

,842

1

7,18

3 2

,020

4

8 1

95,5

48

Disp

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– (1

) (3

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00)

– (4

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Writ

ten

off

––

––

––

– (8

,664

)–

(8,6

64)

Reclassification

– F

ixed

ass

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––

––

– 1

,757

–

(1,7

57)

––

Tran

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diff

eren

ce 5

–

6

2

– (4

4)–

– 4

(2

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At 3

1 Au

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6 1

60

8,6

51 3

48

40

– 9

80,5

40

68,

157

– 1

17

1,0

58,0

13

78


4.

PR

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ERTY

, PLA

NT

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EQ

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MEN

T (C

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T’D

)

Reno

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ts o

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cles

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US$

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US$

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US$

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US$

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US$

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US$

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US$

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US$

’000

US$

’000

Gro

up

Accu

mul

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de

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pairm

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oss

At 1

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tem

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2014

692,

173

180

671,

291

93,0

5116

,493

–11

711

3,44

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Char

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r the

financialyear

2758

053

335

235

,117

9,67

3–

845

,813

Disp

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s(1

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(60)

(19)

–(1

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)(7

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–(4

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)

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diff

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ce(1

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(37)

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–(1

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)–

–(2

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At 3

1 Au

gust

201

5 an

d

1 Se

ptem

ber

2015

662,

753

136

381,

643

125,

454

25,4

49–

6115

5,60

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Char

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financialyear

21

651

3

8 –

118

4

1,13

6 1

3,77

8 –

5

55,

747

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9

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– 1

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–

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– (1

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6 8

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40

– 2

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56,

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– 6

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Net

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At 3

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6 7

4 4

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–

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At 3

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589

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720

61

1,87

870

9,84

726

,514

11,9

014

755,

887

79



4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

(a) All the vessels except for the vessel under (e) below are pledged in connection with the bank loans facilities granted byfinancialinstitutions(Note20).

(b) Included in vessels and equipment under construction in 2015 were borrowing costs arising from borrowings used tofinancetheirconstructionamountingtoapproximatelyUS$363,000.Thecapitalisationratesvariedfrom2.53%to2.63%representingtheborrowingcoststofinancethevesselsunderconstruction.

(c) Duringthefinancialyear,theGroupisindiscussiontoterminatetwoshipbuildingcontractsandassuchUS$8,664,000

(2015:US$Nil)ofvesselsunderconstruction,pertainingtothesetwocontractshasbeenimpaired.Managementdonot expect to have any further obligations or liabilities arising from the termination.

(d) During the financial year, the Group carried out an impairment assessment on the value of the vessels due tothe weakness in the oil and gas sector as well as the oversupply in the offshore oil and gas support industry. An impairmentlossofUS$108,695,000(2015:US$Nil)wasrecognisedinother(expense)/income,net(Note27)lineitemofprofitorlossforthefinancialyearended31August2016.Therecoverableamountsofvesselswerebasedonthehigher of the fair value less cost to sell and the value in use. The fair value less cost to sell is based on the valuations performed by independent valuers. The market comparison method was adopted in deriving the valuations and fair valuemeasurementiscategorisedasLevel3onthefairvaluehierarchy.

Thevalueinusetechniqueisusedwherediscountedcashflowsarepreparedbasedontheremainingusefullivesof vessels, with key assumptions relating to utilisation rates of the vessels, charter rates, charter periods, weighted average cost of capital and growth rate. The utilisation rate use ranged from 50.0% to 98.0%, with charter rates assumed to be consistent, weighted average cost of capital at 9.1% per annum and growth rate at 2.0%.

(e) Duringthefinancialyear,theGroupacquiredfivevesselsunderfinanceleasewhichwillmaturein2023.Thevesselsarepledgedassecurityfortherelatedfinanceleaseliability.Therearenooptionstorenewtheleasesandthereareno escalation clauses. For three of the leased vessels, the Group has call options that allow the Group to acquire the vessels at the end of each year, starting from the start of the lease. For the remaining two vessels, the Group has call optionstoacquirethevesselsattheendofthefifthyearoftheleaseandattheendoftheleaseterm.ThelessorshaveputoptionstosellthevesselstotheGroupattheendoftheleaseterm.Fixedassetspurchasedunderfinanceleases stated at net carrying amounts were as follows:

Group

2016 2015

US$’000 US$’000

Motor vehicles 170 206

Vessels 93,067 11,309

93,237 11,515

80


5. GOODWILL

Group

2015

US$’000

Cost

At 1 September 2014 311

Impairedduringthefinancialyearended31August2015 (311)

At 31 August 2015, 1 September 2015 and 31 August 2016 –

6. INVESTMENTS IN SUBSIDIARIES

Company

2016 2015

US$’000 US$’000

Unquoted ordinary shares, at cost 28,917 28,917

Less:Allowanceforimpairmentloss (1,000) (618)

27,917 28,299

Interest-free loan to a subsidiary 125,000 125,000

Less:Allowancefordoubtfulreceivable (125,000) –

– 125,000

27,917 153,299

The loan to a subsidiary forms part of the Company’s net investment in the subsidiary. The loan is unsecured and settlement is neither planned nor likely to occur in the foreseeable future.

Analysis of provision for impairment loss is as follows:

Company

2016 2015

US$’000 US$’000

At 1 September 618 –

Impairmentlossduringthefinancialyear 382 618

At 31 August 1,000 618

81



6. INVESTMENTS IN SUBSIDIARIES (CONT’D)

Duringthefinancialyear,animpairmentofUS$382,000(2015:US$618,000)wasrecognisedinrespectofasubsidiaryasa result of a decrease in the recoverable amount. The recoverable amount was determined based on fair value less costs ofdisposal.ThefairvaluemeasurementwasestimatedusingtheadjustednettangibleassetsandcategorisedasLevel3on the fair value hierarchy. The lower recoverable amount is due to losses incurred by its subsidiary due to fewer projects available as the industry remains weak.

Analysis of allowance for doubtful receivable is as follows:

Company

2016 2015

US$’000 US$’000

At 1 September – –

Allowanceduringthefinancialyear 125,000 –

At 31 August 125,000 –

In view of the Financial Restructuring Exercise as per Note 40, the repayment of this interest-free loan will not likely occurintheforeseeablefuture.Hence,animpairmentofUS$125,000,000(2015:US$Nil)wasrecognisedinrespectoftheinterest free loan from the subsidiary.

Details of the subsidiaries as at 31 August were as follows:

Name of company Principal activities

Country of incorporation and place of

businessEffective interest held

by the Group

2016 2015

% %

Held by the Company

Emas Offshore Construction and ProductionPte.Ltd.(1)

Provision of ship management services and ship and boat leasing with operator (including chartering)

Singapore 100 100

LewekChampionShipping Pte.Ltd.(1)^^

Ship owner and provision of ship chartering services

Singapore 100 100

LewekChancellorShipping Pte.Ltd.(1)


Singapore 100 100

LewekConqueror(BVI)Ltd(1) Ship owner and provision of ship chartering services

British Virgin Islands/

Singapore

100 100

LewekEmeraldShipping Pte.Ltd.@


Singapore – 100

LewekEversureShipping Pte.Ltd.@

Investment holding Singapore – 100

Emas Offshore Production Services(Vietnam)Pte.Ltd.(1)

Investment holding Singapore 100 100

82






by the Group

2016 2015

% %

Held by the Company (cont’d)

EmasEOCVenturesPte.Ltd.^@ Provision of ship management services Singapore – 50

LewekAlphardShippingPte.Ltd. (1)


Singapore 100 100

LewekCastorShippingPte.Ltd.(1) Ship owner and provision of ship chartering services

Singapore 100 100

LewekCanopusShippingPte.Ltd.(1)


Singapore 100 100

EMASHoldingsPte.Ltd.(1) Investment holding Singapore 100 100

Subsidiaries held by subsidiaries

LewekShippingPteLtd(1) (a) Ship owner and provision of ship chartering services

Singapore 100 100

Emas Offshore (M) Sdn Bhd(2) (a) Shipping agent and provision of ship chartering services and investment holding

Malaysia 100 100

Emas Offshore (Thailand) Ltd(2) (a)

Provision of marine oil and gassales, ship chartering services,ship management services andengineering works, agency services

Thailand 99.99 99.99

TunisOilPte.Ltd.(1) (a) Investment holding Singapore 100 100

LewekAriesPte.Ltd.(1) (a) Ship owner, provision of ship chartering services and investment holding

Singapore 100 100

EmasOffshorePteLtd(1) (a) Shipping agent and provision ofship chartering

Singapore 100 100

Emas Offshore Services Nigeria Limited(3) (a)

Ship management services Nigeria 100 100

Emas Offshore Services Pte.Ltd.(1) (a)

Ship management services Singapore 100 100

LewekEbonyShippingPte.Ltd.@ (a)


Singapore – 100

LewekRobinShippingPte.Ltd.@ (a) Ship owner and provision for ship chartering services

Singapore – 100

LewekLB1ShippingPte.Ltd.(1) (a) Ship owner and provision of ship chartering services

Singapore 100 100

EmasOffshore(Labuan) Bhd(2) (a)

Ship owner and provision for ship chartering services

Malaysia 100 100

83







by the Group

2016 2015

% %

Subsidiaries held by subsidiaries (cont’d)

LewekAntaresShippingPte.Ltd.(1) (a)


Singapore 100 100

Emas Offshore Services (B) Sdn Bhd(2) (b)

Ship management services Brunei 100 100

Bayu Intan Offshore Sdn Bhd(4) (d) #

Dormant Malaysia 100 100

Bayu Emas Maritime Sdn Bhd(4) (d)

Management support services Malaysia 100 100

Aries Warrior AS(5) (c) Dormant Norway 100 100

Aries Warrior DIS(5) (c) Dormant Norway 100 100

Genesis Offshore Sdn Bhd(4) (d) Investment holding Malaysia 100 100

LewekRubyShippingPte.Ltd.(1) (a) Investment holding Singapore 100 100

LewekCrusaderShipping Pte.Ltd.(1) (a)


Singapore 100 100

Emas Offshore Services (M) Sdn Bhd(2) (d)

Ship management services Malaysia 100 100

LewekAltairShippingPrivateLimited(2) (e)

Provision of ship chartering services India 100 100

Emas Offshore Services (Australia)PtyLtd(6) (b)

Ship management services Australia 100 100

Note:

(1) AuditedbyErnst&YoungLLP,Singapore(2) AuditedbymemberfirmsofEYGlobalintherespectivecountries(3) Audited by Baker Tilly Nigeria(4) AuditedbyY.L.Chee&Co.,CharteredAccountants(Malaysia)(5) Audited by Deloitte & Touche, Norway(6) Audited by Moore Stephens, Perth (a) HeldbyEMASHoldingsPteLtd(b) HeldbyLewekRubyShippingPteLtd(c) HeldbyLewekAriesPteLtd(d) HeldbyEmasOffshore(M)SdnBhd(e) HeldbyTunisOilPteLtd

* Entityisinactiveduringthefinancialyear.^ AlthoughtheCompanydoesnotownmorethan50%oftheequitysharesofEmasEOCVenturesPte.Ltd.,andconsequentlyitdoesnotcontrolmore

than half of the voting power of those shares, it has the power to appoint and remove majority of the board of directors and control of the entity is by theboard.Asaresult,EmasEOCVenturesPte.Ltd.iscontrolledbytheCompanyandisconsolidatedinthesefinancialstatements.

# Company is in process of being struck-off.@ Companywasstruck-offduringthefinancialyear.^^ TheCompanyisinthemidstofliquidationsubsequenttofinancialyearend,(Note40(i)).

84



Following the completion of the Business Combination on 3 October 2014, the Acquiring Group have been consolidated as a reverse acquisition. For the purpose of the reverse acquisition, the cost of acquisition of the legal subsidiaries listed under the Acquiring Group is recorded as equity. The cost of acquisition is determined using the fair value of the issuedequityoftheGroupbeforetheacquisition,being110,952,502sharesatthemarketpriceofNorwegianKroner5.09(equivalenttoUS$0.78)pershareatthedateofacquisition. It isdeemedtobeincurredbytheAcquiringGroupintheform of equity issued to the holding company. The Business Combination has enabled the Group to become a full-service offshore support service provider and to create cross-selling opportunities derived by leveraging on the enlarged operating platform and client bases, hence generating economies of scale. The bargain purchase arose as a result of the lower share priceatthecompletiondate.Thefairvaluesofassetsandliabilitiesofthepre-existingentitiesofEMASOffshoreLimited(“pre-existingEOLentities”)acquiredorassumedinthetransaction,andthebargainpurchasearising,areasfollows:

2015

US$’000

Non-current assetsProperty, plant and equipment 118,801Investment in associates 69,948Investment in joint ventures 185,379Longtermreceivables 22,645

396,773

Current assetsTrade receivables 2,600Other receivables and deposits 3,707Prepayments 5,035Balances due from– related companies 23– associates 29,731– joint ventures 15,034Available-for-sale investment 56,003Cash and bank balances 70,166

182,299

Non-current liabilitiesBank loans 47,151Balances due to a related company 48,080Derivativefinancialinstruments 407

95,638

Current liabilitiesTrade payables 6,044Other payables and accruals 61,277Balances due to related companies 44,365Bills payable 123,042Bank loans 17,007Income tax payable 1,347

253,082

85




2015

US$’000

Net assets and liabilities 230,352Less:Netassetsandliabilitiesattributabletonon-controllinginterest (233)

Net assets acquired and liabilities assumed 230,119Less:Bargainpurchasefromacquisitionofpre-existingEOLentities (154,686)

Total consideration 75,433

Trade receivables

Trade receivables acquired comprise of trade receivables with fair value of US$2,600,000 and gross amounts ofUS$6,771,000.Attheacquisitiondate,US$4,171,000ofthecontractualcashflowspertainingtotradereceivablesisnotexpected to be collected.

The fair values of assets acquired and liabilities assumed, the remeasurement loss on existing stake in joint venture and thebargainpurchasearisingoutofthestep-upacquisitionoftheremaining50%stakeofLewekAntaresShippingPte.Ltd.,areasfollows:

2015

US$’000

Non-current assetProperty, plant and equipment 66,000

Current assetsBalances due from a related company 143Cash and bank balances 695

838

Non-current liabilityBank loans 26,775

Current liabilitiesTrade payables 61Balances due to related companies 10,441Bank loans 4,760

15,262

Net assets acquired and liabilities assumed 24,801Less:Bookvalueofpre-existing50%interest (18,431)Less:Remeasurementlossonpre-existing50%interest 6,030Less:Bargainpurchasefromstep-acquisitionofjointventure (1,290)

Total consideration 11,110

Net cash inflow on reverse acquisition

Cash and cash equivalents of subsidiaries acquired 70,862Less:Restrictedcash (30,000)Less:Considerationsettledincash (25,000)

Netcashinflowonreverseacquisition 15,862

86



Impact of acquisition on the results of the Group

IncludedintheprofitforthepriorfinancialperiodwasUS$20,580,000attributabletothepre-existingEOLentities.Revenuefortheperiodfrompre-existingEOLentitiesamountedtoUS$8,509,000.

HadtheBusinessCombinationbeeneffectedon1September2014,therevenueoftheGroupfromcontinuingoperationswouldhaveincreasedbyUS$2,230,000,andtheprofitforthepriorperiodwouldhavedecreasedbyUS$959,000.

7. INVESTMENTS IN ASSOCIATES

Group

2016 2015

US$’000 US$’000

PVKeezPte.Ltd. – 77,161

Intan Offshore Sdn. Bhd. 17,056 33,074

Emas Offshore Services (Philippines) Inc 60 149

17,116 110,384

Details of the associates as at 31 August were as follows:




by the Group

2016 2015

% %

Held by subsidiaries

PVKeezPte.Ltd.* Ship owning and provision of ship chartering services

Singapore * 42

Intan Offshore Sdn. Bhd. # Ship owning and provision of ship chartering services

Malaysia 49 49

Emas Offshore Services (Philippines) Inc @

Provision of ship chartering services Philippines 40 40

Held by associates

SarahPearlShippingPte.Ltd. Provision of ship chartering services Singapore 49 49

LewekSwiftShippingPte.Ltd. Dormant Singapore 49 49

LewekEagleOffshoreSdnBhd Dormant Malaysia 49 49

Jade Offshore Sdn Bhd Dormant Malaysia 49 49

LewekMallardOffshoreSdnBhd Dormant Malaysia 49 49

IntanOffshore(Labuan)Ltd Provision of vessels and equipment on vessels chartering services

Malaysia 49 49

Note:

* Audited by Ernst & Young LLP, Singapore. It was reclassified to assets held for sale during the year and subsequently disposed after FY2016. (Note 15) # Audited by Baker Tilly AC, Malaysia@ Audited by Constantino Guadalquiver & Co

87



7. INVESTMENTS IN ASSOCIATES (CONT’D)

PVKeezPte.Ltd.(“PVKeez”)

PartoftheGroup’sinvestmentinPVKeezisintheformofRedeemableCumulativePreferenceShares(“RCPS”).RCPSwereissuedtotheCompanyastheconsiderationuponcompletionofthesaleofavesselbytheGrouptoPVKeez.

The RCPS has the following rights:

(a) therighttofixedcumulativepreferentialdividendattherateof8%perannumfortheRCPSoutstanding,whichshallaccrue from the commencement of the charter of the vessel to third party;

(b) dividend on RCPS shall rank in priority to any payment of dividend on any other classes of shares;(c) firstpreferenceonreturnofassetsintheeventofliquidation;(d) mayberedeemedbyPVKeezatanytimewhollyorpartlyforthetimebeingissuedandoutstandingatduringthefirm

charter period of the vessel, by giving not less than six months’ notice in writing of the intention to the Company;(e) may be redeemed by the Company at any time wholly or partly for the time being issued and outstanding at upon

expiryofthefirmcharterperiodofthevessel,bygivingnotlessthansixmonths’noticeinwritingoftheintentiontoPVKeez;

(f) mayberedeemedatitsnominalvalueofUS$1perRCPS;and(g) carries no voting right except of matters as prescribed in the shareholders’ agreement.

ThecarryingvalueoftheinvestmentinPVKeezhasbeenreclassifiedtoassetsheldforsale.

SummarisedfinancialinformationinrespectoftheGroup’smaterialassociateissetoutbelow.Thesummarisedfinancialinformationbelowrepresentsamountsshownintheassociate’sfinancialstatementspreparedinaccordancewithFRSs.

Group

2016 2015

US$’000 US$’000

PV Keez Pte. Ltd.

Current assets –* 39,465

Non-current assets –* 350,720

Current liabilities –* 139,507

Non-current liabilities –* 37,816

Redeemable preference shares –* 28,000

Revenue 31,253 76,008

Profitaftertax 7,414 19,340

Preference share dividends (1,117) (2,056)

Profitfortheyear,representingtotalcomprehensiveincomefortheyearfromcontinuing operations 6,297 17,284

* ItwasreclassifiedtoassetsheldforsaleduringtheyearandsubsequentlydisposedafteryearendFY2016.(Note15).

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ReconciliationoftheabovesummarisedfinancialinformationtothecarryingamountoftheinterestinPVKeezPte.Ltd.recognisedintheconsolidatedfinancialstatements:

Group

2015

US$’000

Net assets of the associate 184,862

Proportion of the Group’s ownership interest in the associate 41.74%

Carrying amount of the Group’s interest in the associate 77,161

Group

2016 2015

US$’000 US$’000

Intan Offshore Sdn. Bhd.

Current assets 18,552 41,422

Non-current assets 88,443 61,407

Current liabilities 8,241 7,838

Non-current liabilities 21,730 27,493

Revenue 14,358 32,080

Profitfortheyear,representingtotalcomprehensiveincomefortheyearfromcontinuing operations 10,409 8,829

ReconciliationoftheabovesummarisedfinancialinformationtothecarryingamountoftheinterestinIntanOffshoreSdn.Bhd.recognisedintheconsolidatedfinancialstatements:

Group

2016 2015

US$’000 US$’000

Net assets of the associate 77,024 67,498

Proportion of the Group’s ownership interest in the associate 49% 49%

Group’s share of net assets 37,742 33,074

Impairment (20,686) –

Carrying amount of the Group’s interest in the associate 17,056 33,074

89




The auditor for Intan Offshore Sdn. Bhd. had issued a disclaimer opinion due to the uncertainty of the entity’s ability to continue as a going concern. Accordingly, the Group had reassessed the recoverable amount and an impairment of US$20,686,000 (2015: US$Nil)was recognised as a result of a decrease in the recoverable amount. The recoverableamount was determined based on fair value less costs of disposal. The fair value measurement was estimated using the adjustednettangibleassetsandcategorisedasLevel3onthefairvaluehierarchy.Thelowerrecoverableamountisdueto decrease in the valuation of the vessels and impairment of receivables held by the associate.

Information of the associate that is not individually material is as follows:

Group

2016 2015

US$’000 US$’000

The Group’s share of loss, representing total comprehensive income for the year from continuing operations (85) 75

Carrying amount of the Group’s interest in the associate 60 149

8. INVESTMENTS IN JOINT VENTURES

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

EmasVictoria(L)Bhd 81,811 150,974 81,811 120,305

SJRMarine(L)Ltd 19,064 27,667 21,581 28,059

Other joint ventures 3,068 2,981 – *

103,943 181,622 103,392 148,364

* LessthanUS$1,000

Analysis of allowance for impairment loss is as follows:

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

At 1 September – – 13,249 –

Allowanceduringthefinancialyear 81,621 – 40,675 13,249

At 31 August 81,621 – 53,924 13,249

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8. INVESTMENTS IN JOINT VENTURES (CONT’D)

Duringthefinancialyear,theGroupandtheCompanyhasrecognisedanimpairmentofUS$81,621,000andUS$40,675,000respectively(2015:US$NilandUS$13,249,000)inrespectofthejointventures,EmasVictoria(L)BhdandSJRMarine(L)Ltd,asaresultofadecreaseintherecoverableamount.Therecoverableamountwasdeterminedbasedonfairvaluelesscosts of disposal. The fair value measurement was estimated using the adjusted net tangible assets and categorised as Level3onthefairvaluehierarchy.Thelowerrecoverableamountisduetodecreaseinthevaluationofthevesselsheldby the joint ventures.

Details of the joint ventures as at 31 August were as follows:




by the Group

2016 2015

% %

Held by the Company

EmasVictoria(L)Bhd** Ship owner and provision ofship chartering services

Malaysia 49 49

Victoria Production Services Sdn Bhd#

Operation and maintenanceoffloatingproductionstorageandoffloadingunit

Malaysia 49 49

SJRMarine(L)Ltd** Leasingofvessels,bargesandequipment on bareboat basis

Malaysia 49 49

Held by a subsidiary

PVTransEmasCoLtd^ Operation and maintenanceoffloating,production,storageandoffloading

Socialist Republic of

Vietnam

– 50

Note:

** AuditedbyBakerTillyMonteiro&Heng,Malaysia# Audited by Baker Tilly AC, Malaysia^ AuditedbyDeloitteVietnamCompanyLtd,struckoffduringthefinancialyear

Although theGroupowns less thanhalfof theequity interests inEmasVictoria (L)Bhd,VictoriaProductionServicesSdnBhdandSJRMarine(L)Ltd(“SJRMarine”), theseentitieshavenotbeenregardedasassociatesof theGroupasmanagement have assessed that the Group has half of the total board seats by virtue of the contractual arrangements with the joint venture party. Accordingly, all decisions over the relevant activities of these entities require unanimous approval.

91




Simultaneous with the initial agreement over the transfer of the 49% equity interest in SJR Marine from PPT to the Company on 5 December 2012, the Company entered into the following supplementary agreement:

(i) PPT grants the Company the right to acquire all of PPT’s remaining equity interest in SJR Marine (the “Call Option Shares”) from PPT, and the Company may exercise the Call Option at the Call Option Price at any time during the two year period from the completion date of the acquisition of the 49% equity interests in SJR Marine (“Completion Date”)(“CallOptionPeriod”).TheCallOptionhaslapsedon26December2015.TheCallOptionPriceisfixedattheprice equivalent to 51% of the net assets value of SJR Marine at the Completion Date which amount to approximately US$43,000,000;

(ii) In the event that the Call Option is not exercised during the Call Option Period, the parties shall use their best endeavours to procure SJR Marine to sell SJR Marine’s vessel, the Enterprise 3, to an interested third party within a period of 12 months from the expiry of the Call Option Period (“Enterprise 3 Disposal Period”) on terms to be agreed upon by the parties. Where SJR Marine is unable to dispose of Enterprise 3 within the Enterprise 3 Disposal Period, PPT shall be entitled to exercise its right under the Put Option. The Disposal Period has ended on 26 December 2016; and

(iii) The Company grants PPT the right (“Put Option”) to sell all of its remaining equity interest in SJR Marine (“Put Option Shares”) to the Company. The Company shall acquire the Put Option Shares at the Put Option Price which is equivalent to the Call Option Price. PPT may exercise the Put Option at any time within the period of one month prior to the expiry of the Enterprise 3 Disposal Period (“Put Option Period”). In the event that the Put Option is not exercised within the Put Option Period, PPT’s Put Option Rights shall lapse. The Put Option was exercised by PPT on 8December2016subsequenttothefinancialyearend.

As the Put Option was exercised subsequently, the Group has entered into a settlement agreement with PPT to achieveafullsettlementarisingfromthePutOptionon23December2016.However,thesettlementagreementwasaborted on 17 August 2017 due to inability to complete the condition precedents to the settlement agreement.

Consequently, as the Put Option has already been exercised, the Group has recognised a derivative liability of US$20,719,000(2015:US$Nil),beingthefairvalueofthePutOption.Thefairvalueisderivedbasedontheexerciseprice less the adjusted net asset value of SJR Marine as at 31 August 2016.

Significant restrictions

EmasVictoria(L)Bhd,VictoriaProductionServicesSdnBhdandSJRMarine(L)Ltdcannotdistributeprofitsorrepayadvances made by the Group unless consents are obtained from the joint venture partner and the banks under the loan covenants.ThesharesofEmasVictoria(L)BhdarepledgedinconnectionwiththebankloansfacilitiesgrantedtoEmasVictoria(L)Bhd.

SummarisedfinancialinformationinrespectofeachoftheGroup’smaterialjointventuresissetoutbelow.Thesummarisedfinancialinformationbelowrepresentsamountsshowninthejointventure’sfinancialstatementspreparedinaccordancewith FRSs.

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Group

2016 2015

US$’000 US$’000

Emas Victoria (L) Bhd

Cash and cash equivalents 33,497 20,214

Other current assets 9,123 19,772

Current assets 42,620 39,986


Trade and other payables and provisions 16,544 17,465

Other current liabilities 17,728 12,654



Revenue 60,402 65,985

Operating expenses, net (3,853) (4,461)

Depreciation (24,256) (21,624)

Interest expense (6,906) (7,648)

Profitbeforetax 25,387 32,252

Income tax expense (7) (6)

Profitforthefinancialyear,representingtotalcomprehensiveincomefortheyearfrom continuing operations 25,380 32,246

ReconciliationoftheabovesummarisedfinancialinformationtothecarryingamountoftheinterestinEmasVictoria(L)Bhdrecognisedintheconsolidatedfinancialstatements:

Group

2016 2015

US$’000 US$’000

Net assets of the joint venture 268,063 243,151

Proportion of the Group’s ownership interest in joint venture 49% 49%

Share of net assets of the joint venture 131,351 119,144

Deferredprofit (2,495) (2,725)

Additional investment 30,252 34,555


Carrying amount of the Group’s interest in joint venture 81,811 150,974

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AdditionalinvestmentinEmasVictoria(L)Bhdrelatestoadditionalcostsincurredfortheupgradeandmodificationofthejoint venture’s vessel, which is borne by the Company under the relevant Shareholders’ Agreement.

Theauditor forEmasVictoria (L)Bhdhad issuedadisclaimeropiniondue to theuncertaintyof theentity’sability tocontinue as a going concern. Accordingly, the Group had reassessed the recoverable amount and an impairment of US$77,297,000 (2015: US$Nil)was recognised as a result of a decrease in the recoverable amount. The recoverableamount was determined based on fair value less costs of disposal. The fair value measurement was estimated using the adjustednettangibleassetsandcategorisedasLevel3onthefairvaluehierarchy.Thelowerrecoverableamountisdueto decrease in the valuation of the vessel held by the joint venture.

Group

2016 2015

US$’000 US$’000

SJR Marine (L) Ltd

Cash and cash equivalents 50 3,032

Other current assets 196 23

Current assets 246 3,055


Trade and other payables and provisions 23,496 22,841

Other current liabilities 8,400 6,650



Operating (expenses)/income, net (2,596) 52

Depreciation (5,567) (4,798)

Interest expense (568) (575)

Lossbeforetax (8,731) (5,321)

Income tax expense (2) –

Lossforthefinancialyear,representingtotalcomprehensiveincomefortheyearfrom continuing operations (8,733) (5,321)

94



ReconciliationoftheabovesummarisedfinancialinformationtothecarryingamountoftheinterestinSJRMarine(L)Ltdrecognisedintheconsolidatedfinancialstatements:

2016 2015

US$’000 US$’000

Net assets of the joint venture 47,730 56,463

Proportion of the Group’s ownership interest in joint venture 49% 49%

Group’s share of net assets 23,388 27,667


Carrying amount of the Group’s interest in joint venture 19,064 27,667

TheauditorforSJRMarine(L)Ltdhadissuedanunqualifiedauditopinionwithanemphasisofmatterparagraphhighlightingvarious uncertainties faced by the entity to continue as a going concern. Accordingly, the Group had reassessed the recoverableamountandanimpairmentofUS$4,324,000(2015:US$Nil)wasrecognisedasaresultofadecreaseintherecoverable amount. The recoverable amount was determined based on fair value less costs of disposal. The fair value measurementwasestimatedusingtheadjustednettangibleassetsandcategorisedasLevel3onthefairvaluehierarchy.The lower recoverable amount is due to decrease in the valuation of the vessel held by the joint venture.

Aggregate information of the joint ventures that are not individually material are as follows:

Group

2016 2015

US$’000 US$’000

The Group’s share of:

–Profitorlossfromcontinuingoperations 1,237 1,558

– Other comprehensive income (77) 77

Total comprehensive income 1,160 1,635

Carrying amount of the Group’s interest in the joint ventures 3,068 2,981

9. LONG TERM RECEIVABLES

The long term receivables relate to deferred considerations which will be offset against the purchase option or recovered upon the end of the operating lease (Note 35b). The fair value of the deferred consideration at initial recognition is estimated bydiscountingtheexpectedfuturecashflowsbytheappropriatediscountratesof3.03%to9.81%.

95



9. LONG TERM RECEIVABLES (CONT’D)

Group

2016 2015

US$’000 US$’000

Balanceatbeginningofthefinancialyear 37,591 5,200

Acquired through business combination (Note 6) – 22,645

Arising from disposal of vessels on sale and leaseback arrangements 25,079 9,117

Receivedduringthefinancialyear (715) –

Amortisation of interest income 2,410 629

Written off (51,731) –

Balanceatendofthefinancialyear 12,634 37,591

DuetothewindingupapplicationofLewekChampionShippingPteLtd (Note40(i))andterminationof twobareboatcharters(Note40(ii))subsequenttofinancialyearend,theGrouphasimpairedthedeferredconsiderationforthe3vesselsastheyweredeemednotrecoverable.TheGrouphaswrittenoffUS$51,731,000ofdeferredconsiderationsduringthefinancialyear.ThebalanceatendofthefinancialyearrepresentedamountduetolessorsandtherecoverabilityoftheseamountsaresubjectedtothesuccessfulcompletionofthefinancialrestructuringexerciseasdisclosedinNote40(iv).

10. INVENTORIES AND WORK-IN-PROGRESS

Group

2016 2015

US$’000 US$’000

Inventories held for trading, at cost 1,764 6,248

Work-in-progress – 14

Total inventories and work-in-progress at lower of cost and net realisable value 1,764 6,262

TheGrouphasnotmadeanyallowanceforstockobsolescenceduringthefinancialyear.

11. LEASE RECEIVABLES

Group

2016

Gross Interest Principal

US$’000 US$’000 US$’000

Within 1 year 667 (75) 592

After 1 year but within 5 year 1,333 (111) 1,222

2,000 (186) 1,814

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11. LEASE RECEIVABLES (CONT’D)

Leasetermis5years.Theleasedoesnotmandatethetransferofownershipoftheleasedassetattheendoftheleaseterm.Theleasedoesnotcontainrestrictionsconcerningdividends,additionaldebtorfurtherleasing.Leaseobligationsbearinterestatflatratesof5%(2015:Nil)perannum.

12. TRADE AND OTHER RECEIVABLES

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Trade and other receivables (current):

Trade receivables 16,471 33,155 – –

Other receivables 13,275 79,348 101 154

Balances due from

– holding company 9,196 13,600 – 5,809

– subsidiaries – – 336,420 322,000

– associates 11,285 35,222 – –

– joint ventures 8,351 15,989 7,155 13,094

– related companies 92,769 129,074 – 3,005

Deposits 2,046 3,709 4 10

Total other receivables 136,922 276,942 343,680 344,072

Total trade and other receivables 153,393 310,097 343,680 344,072

Long term receivables (non-current):

Deferred consideration 12,634 37,591 – –

Total trade and other receivables (current) 153,393 310,097 343,680 344,072

Total long term receivables (non-current) 12,634 37,591 – –

Add: Cash and cash equivalents (Note 14) 11,602 24,035 362 4,807

Add: Cash pledged 882 37,298 – 1,500

Total loans and receivables 178,511 409,021 344,042 350,379

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12. TRADE AND OTHER RECEIVABLES (CONT’D)

(a) Trade receivables

Group

2016 2015

US$’000 US$’000

Trade receivables

– Billed 25,309 36,900

– Unbilled 819 2,862

26,128 39,762

Less:Allowancefordoubtfuldebts (9,657) (6,607)

16,471 33,155

Analysis of allowance for doubtful debts is as follows:

Group

2016 2015

US$’000 US$’000

Atbeginningofthefinancialyear 6,607 5,125

Allowanceforthefinancialyear 3,124 4,607

Written off against allowance (60) (2,780)

Write back of allowance (14) (343)

Translation difference – (2)

Atendofthefinancialyear 9,657 6,607

Allowance for trade receivables are individually assessed at the end of the reporting period. Trade receivables that are individually determined to be impaired at the end of the reporting period relate to amounts that were more than 365 days and in dispute. The management has assessed the probability of collection to be low.

The age analysis of trade receivables is as follows:

2016 2015

Gross Allowance Gross Allowance

US$’000 US$’000 US$’000 US$’000

Not past due or less than 60 days overdue 11,255 – 23,481 –

Past due

– 61 to 180 days 2,351 (310) 6,560 –

– More than 180 days 12,522 (9,347) 9,721 (6,607)

26,128 (9,657) 39,762 (6,607)

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(a) Trade receivables (cont’d)

Trade receivables are non-interest bearing and are normally settled on 30-45 day terms. The Group deals with customers who are mainly creditworthy oil majors or their preferred service providers. Based on historical collections experience, the Group believes that no further allowance for doubtful debts is necessary in respect of certain trade receivables which are not past due as well as certain trade receivables which are past due but not impaired.

(b) Other receivables

These amounts are unsecured, interest-free and repayable in cash on demand. Included in other receivables is anamountofUS$3,500,000relatingtoarefundabledepositpaidtoacompanyrelatedtoadirectoroftheparentcompany.

The recoverability of amounts due from holding company are dependent on the successful completion of the holding company’s restructuring as disclosed in Note 2.1.

Therecoverabilityofamountsduefromsubsidiariesaredependentonthesuccessfulcompletionofthefinancialrestructuring exercise as disclosed in Note 40 (iv).

The recoverability of amounts due from joint ventures are dependent on the successful completion of the PPT’s restructuring as disclosed in Note 40 (iii).

The amount due from related parties comprises of balances owing from Emas Chiyoda Subsea Limited & itssubsidiaries (“ECS Group”), Ezra Holding’s subsidiaries, Triyards Holdings Limited & its subsidiaries (“TriyardsGroup”) and associates of PPT. The recoverability of amounts due from related parties are dependent on the successful completion of the restructuring exercise as disclosed in Note 40 (v), Note 2.1, Note 40 (vi) and Note 40 (iii) respectively.

(c) Trade and other receivables

Significanttradeandotherreceivablesdenominatedinforeigncurrencies(withreferencetotherespectivefunctionalcurrencies of the Company and the respective subsidiaries) as at 31 August are as follows:

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Indian Rupees – 3,131 – –

Malaysian Ringgit 841 1,806 – –

Brunei Dollars 1,437 993 – –

Singapore Dollars 756 571 102 164

99




(d) Balances due from the holding company, subsidiaries, associates, joint ventures and related companies

These amounts are unsecured, interest-free and repayable in cash on demand. All balances are denominated in United States Dollars. Balances due from subsidiaries are non-trade in nature.

Analysis of allowance for doubtful debts for balances due from associates are as follows:

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Atbeginningofthefinancialyear – – – –

Allowanceforthefinancialyear 332 – – –

Atendofthefinancialyear 332 – – –

Analysis of allowance for doubtful debts for balances due from joint ventures are as follows:

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Atbeginningofthefinancialyear – – – –

Allowanceforthefinancialyear 8,455 – 8,449 –

Atendofthefinancialyear 8,455 – 8,449 –

With reference to Note 40 (iii), these receivables are due from associates and joint ventures that are held in conjunction with PPT.

13. AVAILABLE-FOR-SALE (“AFS”) INVESTMENT

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Quoted equity investment, at fair value – 9,989 – 9,989

InNovember2015,theCompanyhasenteredintoaLetterofUndertakingwiththeultimateholdingcompanywherebytheultimateholdingcompanyundertooktopurchasetheinvestmentatapproximatelyUS$56,000,000andtheCompanyhastheoptiontoselltheinvestmenttotheultimateholdingcompanyattheagreedprice.TheLetterofUndertakinghaslapsedsubsequenttofinancialyearendandtheCompanyisstillinthemidstofdiscussionwiththeultimateholdingcompany.

WithreferencetoNote2.1,theultimateholdingcompanyhassincevoluntarilyfiledapetitionforreliefunderChapter11of the United States Bankruptcy Code to obtain the protection of the United States Bankruptcy Court while a restructuring is being pursued. As such, on grounds of prudence, the Group’s AFS investment was adjusted down from its fair value.

100


13. AVAILABLE-FOR-SALE (“AFS”) INVESTMENT (CONT’D)

Inthepreviousfinancialyear,thefairvaluesofthesesecuritieswerebasedonthequotedclosingmarketpricestranslatedat closing rate on the last market day at the end of the reporting period. As the end of the reporting period, the Group and theCompanyhasevaluatedwhetherimpairmentchargeonAFSinvestmentisrequiredduetosignificantorprolongeddeclineinthefairvaluebelowitscost.FollowingtheclassificationofPPTtoPN17status,theGroupandtheCompanyhas impaired the investment in full. PN17 stands for Practice Note 17/2005 and is issued by Bursa Malaysia; relating tocompaniesthatare infinancialdistress.Companiesthat fallwithinthedefinitionofPN17willneedtosubmit theirproposal to the Approval Authority to restructure and revive the company in order to maintain the listing status.

The Group and the Company recognised fair value loss of US$9,989,000 and US$9,989,000 (2015: fair value loss ofUS$46,015,000andUS$53,093,000)inothercomprehensiveincomerespectively.TheGroupandtheCompanysubsequentlyreclassifiedcumulativefairvaluelossofUS$56,004,000andUS$52,250,000(2015:US$nilandUS$nilrespectively)fromequitytotheprofitorlossrespectively.

TheAFSinvestmentispledgedinconnectionwiththebankloansfacilitiesgrantedbyfinancialinstitutions(Note17).

14. CASH AND CASH EQUIVALENTS

Cashandcashequivalentsincludedintheconsolidatedstatementofcashflowscomprisethefollowingamounts:

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Fixed deposits – 30,718 – –

Cash and bank balances 12,484 30,615 362 6,307

12,484 61,333 362 6,307

Less:Restrictedcash/chargedaccounts (882) (37,298) – (1,500)

Cash and cash equivalents 11,602 24,035 362 4,807

(a) Fixed deposits

Thefixeddepositsweremadeforvaryingperiodsofbetweenonedayandthreemonthsdependingon thecashrequirement of theGroup and earned effective interest rates ranging from 0.5% to 0.76% per annum. The fixeddeposits were denominated in United States Dollars.

(b) Cash and bank balances

Significantcashandbankbalancesdenominatedinforeigncurrencies(withreferencetotherespectivefunctionalcurrencies of the Company and the respective subsidiaries) as at 31 August are as follows:

101



14. CASH AND CASH EQUIVALENTS (CONT’D)

(b) Cash and bank balances (cont’d)

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Singapore Dollars 2,580 3,132 192 191

Indian Rupees 65 276 – –

Malaysian Ringgit 62 112 – –

(c) Restricted cash/charged accounts

Restricted cash/charged accounts are either restricted in use, charged over the months held in the operating accounts or have been placed by connection with the credit facilities granted (Note 20).

15. ASSETS HELD FOR SALE

Group

2016 2015

US$’000 US$’000

Investment in an associate 29,597 –

EMASOffshoreProductionService(Vietnam)Pte.Ltd.(“EOPS”),afullyownedsubsidiaryoftheGroup,hadon14April2016acceptedanon-bindingletterofintenttosellits41.7%equityshareintheassociate,PVKeezPteLtd,toathirdparty(“Purchaser”).Aspartofthetransaction,theultimateholdingcompanywillalsosellitsentireownershipinPVKeeztothePurchaser.

The Group and its ultimate holding company subsequently signed a share purchase agreement with the Purchaser on 1July 2016. It hasbeenagreed that from the saleof EOPS’s equity interest inPVKeezPte Ltd, EOPSwill receiveacash consideration of approximately US$10,719,000 and a deferred consideration of US$63,000,000. Such deferredconsideration is based on an earned-out mechanism earned by the vessel between 2020 up to 2025 (“Total Consideration”). A monte-carlo simulation is performed by independent valuation expert to fair value the deferred consideration. As assets held for sale is to be carried lower of cost and fair value less cost to sell, the carrying value is derived from aggregate of the fair valuation of the deferred consideration, the cash consideration less the cost to extinguish the options granted under thepreviousshareholderagreementofPVKeezPteLtd.Basedonthevaluationderivedfromthesimulation,theGrouphasrecordedanimpairmentlossontheassetsheldforsaleamountingtoUS$50,194,000.

On19December2016,alltheconditionsforthesalehavebeensatisfiedandtheGroupnolongerholdsanyequitystakeinPVKeez.

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16. TRADE AND OTHER PAYABLES

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Trade and other payables (current):

Trade payables 36,039 12,789 – –

Other payables 55,440 106,237 4,392 3,081Balances due to– holding company 52,051 14 23,898 –– subsidiaries – – 147,872 149,535– related companies 9,162 28,183 1,293 164– associates 15,279 7,398 – –– joint ventures 103 – – –

Total other payables 132,035 141,832 177,455 152,780

Total trade and other payables 168,074 154,621 177,455 152,780

Other payables (non-current):Balance due to holding company 125,000 125,000 125,000 125,000Balance due to a related company – 31,970 – –

125,000 156,970 125,000 125,000

Total trade and other payables (current and non-current) 293,074 311,591 302,455 277,780Add:– Bills payable to banks (Note 17) 101,464 120,923 22,000 42,000–Leaseobligations(Note19) 97,002 11,357 – –– Bank term loans (Note 20) 466,829 497,605 45,000 45,000

Totalfinancialliabilitiescarriedatamortisedcost 958,369 941,476 369,455 364,780

(a) Trade payables

Trade payables are non-interest bearing and are normally settled on 30 to 90 day terms.

Significanttradepayablesdenominatedinforeigncurrencies(withreferencetotherespectivefunctionalcurrenciesof the Company and the respective subsidiaries) as at 31 August are as follows:

Group

2016 2015

US$’000 US$’000

Singapore Dollars 11,241 5,673Euro 1,407 544Brunei Dollars 1,376 468Thai Baht 675 440NorwegianKroner 140 21Indian Rupees 38 278

103



16. TRADE AND OTHER PAYABLES (CONT’D)

(b) Other payables

Details of other payables are as follows:

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Accrued interest payable 4,846 2,093 1,238 371

Accrued operating expenses 43,564 60,086 1,898 2,649

Option price payable – 37,720 – –

Other creditors 7,030 6,338 1,256 61

55,440 106,237 4,392 3,081

Other creditors mainly relate to payables to equipment suppliers and are unsecured, interest-free and repayable in cash on demand.

Significantotherpayablesdenominatedinforeigncurrencies(withreferencetotherespectivefunctionalcurrenciesof the Company and the respective subsidiaries) as at 31 August are as follows:

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Singapore Dollars 3,799 2,735 1,015 140

Indian Rupees 114 288 – –

Malaysian Ringgit 1 619 – –

(c) Balances due to holding company, subsidiaries, related companies and associates (current)

These amounts are unsecured, interest-free and repayable in cash on demand. All balances are denominated in United States Dollars. Balances due to holding company and subsidiaries are non-trade in nature.

(d) Balances due to holding company and a related company (non-current)

Theamountduetoholdingcompanyisunsecured,interest-freeforthefirstyearandinterestbearingat3.5%forthesecond and third year. The amount is subordinated to the bank loans and bills payables.

Theamountsduetoarelatedcompanyareunsecured, interest-free,tradeinnatureandhavenofixedrepaymentdate.

The above balances are denominated in United States Dollars.

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17. BILLS PAYABLE TO BANKS

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Bills payable

– secured 52,800 72,800 22,000 42,000

– unsecured 48,664 48,123 – –

101,464 120,923 22,000 42,000

Significantbillspayabledenominatedinforeigncurrencies(withreferencetotherespectivefunctionalcurrenciesoftheCompany and the respective subsidiaries) as at 31 August are as follows:

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Singapore Dollars 15,413 14,872 – –

Bills payable of the Group are secured by:

(a) firstandsecondmortgageinthenameofvesselsownedbytheGroup;

(b) pledge of AFS securities;

(c) assignment of current and earnings accounts and receivables;

(d) assignmentofcharterincome,chartercontractsandvesselinsuranceinfavourofthefinancialinstitution;and

(e) corporate guarantee from the Company, a subsidiary or the holding company.

The bills payable of the Group bear interest at 1.5% to 2.75% (2015: 1.5% to 3.0%) per annum above the bank’s Cost of Funds(“COF”),SingaporeInterBankOfferRate(“SIBOR”)orLondonInterBankOfferRate(“LIBOR”)of0.17%to2.27%(2015: 0.13% to 1.60%) per annum. The bills payable of the Company bear interest at 1.55% (2015: 1.55% to 2.50%) per annumaboveCOF(2015:LIBOR)of0.28%to0.60%(2015:0.23%to0.38%)perannum.

With reference to Note 2.1, the Group has presented its bills payable to banks as current liability at the end of the reporting periodasithadbreachedcertainfinancialcovenantsasat31August2016.

105



18. DEFERRED INCOME

Group

2016 2015

US$’000 US$’000

Current 4,108 436

Non-current 26,396 5,822

30,504 6,258

The deferred income comprises of the following two components:

(1) TheGroup’sshareoftheunrealisedprofitarisingfromthesaleofvesselstoanassociate.Thedeferredincomewillbe amortised over the remaining useful lives of the vessels and taken against the share of results of associates in the consolidated income statement.

(2) Theexcessofsalesproceedsoverthecarryingamountsofthevesselsforsaleandfinanceleasebackvessels.Thedeferred income will be amortised over the lease term.

Movement in deferred income is as follows:

Group

2016 2015

US$’000 US$’000

Atbeginningofthefinancialyear 6,258 6,694

Amortisationtoshareofresultsofassociatesduringthefinancialyear (436) (436)

Amortisationtootherincomeduringthefinancialyear (1,423) –

Additionduringthefinancialyear 26,105 –

Atendofthefinancialyear 30,504 6,258

19. LEASE OBLIGATIONS

Group

Minimumpayments

2016

Presentvalue of

payments2016

Minimumpayments

2015

Presentvalue of

payments2015

US$’000 US$’000 US$’000 US$’000

Not later than one year 149,922 97,002 2,199 1,188

Laterthanoneyearbutnotlaterthanfiveyears – – 10,633 10,169

– – 10,633 10,169

Total minimum lease payments 149,922 97,002 12,832 11,357

Less:Amountsrepresenting financecharges (52,920) – (1,475) –

Present value of minimum lease payments 97,002 97,002 11,357 11,357

106


19. LEASE OBLIGATIONS (CONT’D)

Leasetermsarefor2to5years.None(2015:One)oftheleasesmandatesthetransferofownershipoftheleasedassetattheendoftheleaseterm.Leasetermsdonotcontainrestrictionsconcerningdividends,additionaldebtorfurtherleasing.

Leaseobligationsbear interestatflatratesrangingfrom2.6%to9.8%(2015:2.6%to9.4%)perannum. Theeffectiveinterest rates ranged from 4.9% to 9.8% (2015: 5.1% to 11.0%) per annum.

With reference to Note 2.1, the Group has presented its lease obligations as current liability at the end of the reporting periodasithadbreachedcertainfinancialcovenantsasat31August2016.

20. BANK TERM LOANS

Maturity Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Current

Bank term loans - secured2017

(2015: 2016) 466,829 84,879 45,000 –

Non-current

Bank term loans - secured2018 – 2022

(2015: 2019 – 2023) – 412,726 – 45,000

Total 466,829 497,605 45,000 45,000

With reference to Note 2.1, the Group has presented all its bank term loans as current liability at the end of the reporting periodasithadbreachedcertainfinancialcovenantsasat31August2016.

Security granted

Bank term loans of the Group are secured by:

(a) firstandsecondmortgageinthenameofvesselsownedbytheGroup;

(b) assignment of insurance, current and earnings accounts and receivables;

(c) assignmentofcharterincome,chartercontractsandvesselinsuranceinfavourofthefinancialinstitution;and

(d) corporate guarantee from the Company, subsidiary and/or the ultimate holding company.

Fair value of non-current borrowings

The carrying value of the balances approximates fair value as these balances are of variable interest rate with re-pricing features.

The bank term loans of the Group bear interest at 1.1% to 4.5% (2015: 1.1% to 4.5%) per annum above the Singapore Inter BankOfferRate(“SIBOR”)orLondonInterBankOfferRate(“LIBOR”)of0.19%to1.41%(2015:0.15%to1.02%)perannum.ThebanktermloansoftheCompanybear interestat2.85%(2015:2.85%)perannumaboveLIBORof0.28%to0.93%(2015: 0.27% to 0.28%) per annum.

107



21. ONEROUS CONTRACTS

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Atbeginningofthefinancialyear – – – –Addition 24,225 – – –

Atendofthefinancialyear 24,225 – – –

As at 31 August 2016, the Group has recognised onerous contracts liabilities relating to the Group’s operating leases on its vessels which were off-hired.

22. TAX

Majorcomponentsoftaxexpenseforthefinancialyearended31Augustwereasfollows:

Group

2016 2015

US$’000 US$’000

Current tax – 3,712Withholding tax 2,960 3,900(Over)/under provision in respect of prior years– current tax (820) 361– deferred tax 1,639 –

3,779 7,973

Thereconciliationofthetaxexpenseandtheproductof(loss)/profitbeforetaxmultipliedbytheapplicabletaxrateforthefinancialyearsended31Augustwereasfollows:

(Loss)/profitbeforetax (531,461) 207,517

Tax at statutory tax rate of 17% (2015: 17%) (90,348) 35,278Adjustments for tax effect of:Difference in overseas tax rate (10,249) (1,125)Expenses not deductible for tax purposes 91,657 2,200Income not taxable (503) (28,944)Tax exempt income under Sections 13A or 13F of the Singapore Income Tax Act

and rebates available (1,569) (4,241)Tax rebates (48) (15)Utilisationofpreviouslyunrecogniseddeferredtaxbenefit (47) –Currentyeardeferredtaxbenefitnotrecognised 14,868 5,041Transfer of unabsorbed tax losses as group relief (519) –(Over)/under provision in prior years 819 361Withholding tax 2,960 3,900Share of results of associates and joint ventures (3,223) (4,482)Others (19) –

Tax expense 3,779 7,973

108


22. TAX (CONT’D)

Movements in deferred tax liabilities were as follows:

Group

2016 2015

US$’000 US$’000

Atbeginningofthefinancialyear 11 12

Chargedtoprofitorloss 1,639 –

Translation difference 25 (1)

Atendofthefinancialyear 1,675 11

* LessthanUS$1,000

Deferred tax liabilities relate to unrealised exchange differences.

Unrecognised tax losses

Attheendofthereportingperiod,theGrouphastaxlossesofapproximatelyUS$31,557,000(2015:US$30,461,000)thatareavailableforoffsetagainstfuturetaxableprofitsofthecompaniesinwhichthelossesarose,forwhichnodeferredtax asset is recognised due to uncertainty of its recoverability. The use of these tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. The tax losses have no expiry date.

23. SHARE CAPITAL

Group Company

No. of shares US$’000

No. of shares US$’000

As at 1 September 2014 110,954,502 13,248 110,954,502 94,578

Capital injection by parent – 92,000 – –

Issuance of ordinary shares pursuant to reverse acquisition 280,133,252 86,534(2) 280,133,252 218,476(1)

Share placement 48,585,000 46,045 48,585,000 46,045

Expenses on issue of ordinary shares – (1,888) – (1,888)

As at 31 August 2015 439,672,754 235,939 439,672,754 357,211

Strike off of holding companies – (6,398) – –

As at 31 August 2016 439,672,754 229,541 439,672,754 357,211

The holders of the ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions. The ordinary shares have no par value.

109



23. SHARE CAPITAL (CONT’D)

(1) ThisrepresentspartofthepurchaseconsiderationfortheCompany’sacquisitionoftheAcquiringGroupwhichwassatisfiedbytheallotmentandissuanceof280,133,252ordinarysharesatamarketpriceofNorwegianKroner5.09(equivalenttoUS$0.78)pershareinthecapitaloftheCompanyon 3 October 2014.

(2) This represents the fair value of the consideration transferred in relation to the Business Combination. As the Acquiring Group is privately held, the quoted market price of the Company’s shares provides a more reliable basis for measuring the consideration transferred than the estimated fair value of the shares in the Acquiring Group. The consideration transferred is determined using the fair value of the issued equity of the Company before the

acquisition,being110,952,502sharesatthemarketpriceofNorwegianKroner5.09(equivalenttoUS$0.78)pershareatthedateofacquisition.

24. RESERVES

(a) Capital reserve

Capital reserve arises from the acquisition of non-controlling interests.

(b) Fair value adjustment reserve

FairvalueadjustmentreserverepresentsthecumulativefairvaluechangesofAFSfinancialassetsuntiltheyaredisposed of or impaired.

(c) Hedging reserve

Hedging reserve records theportionof the fair valuechangesonderivativefinancial instrumentsdesignatedashedginginstrumentsincashflowhedgesthatisdeterminedtobeaneffectivehedge.

Netchangeinthereservearosefromnetgainonfairvaluechangesonderivativefinancialinstruments.

(d) Translation reserve

Thetranslationreserveisusedtorecordexchangedifferencesarisingfromthetranslationofthefinancialstatementsof operations whose functional currencies are different from that of the Group’s presentation currency.

25. TREASURY SHARES

Group and Company

2016 2015

US$’000 US$’000

Atbeginningofthefinancialyear (718) –

Purchase of treasury shares – (718)

Atendofthefinancialyear (718) (718)

The Group acquired 1,240,430 shares through the Oslo Bors and SGX in October 2014 and November 2014. The total amount paid to acquire the shares has been deducted from shareholders’ equity. The shares are held as treasury shares and all shares were fully paid for.

110


25. TREASURY SHARES (CONT’D)

Employee Share Plan

TheCompanyhasnottransferredanytreasuryshares(2015:Nil)asshareawardsduringthefinancialyear.

As at 31 August 2016, the Company has 1,240,430 (2015: 1,240,430) shares held as treasury shares.

26. REVENUE

Group

2016 2015

US$’000 US$’000

Chartering revenue 142,524 222,062Ship management fees 12,614 7,972Trading sales 10,361 14,929Project management revenue 2,080 2,208

167,579 247,171

27. OTHER (EXPENSE)/INCOME, NET

Group

2016 2015

US$’000 US$’000

Impairment loss on property, plant and equipment (108,695) –Impairment loss on joint ventures (81,621) –Impairment loss on AFS investment (56,004) –Lossrecognisedonremeasurementtofairvaluelesscoststosellonassetsheld

for sale (50,194) –Provision for onerous contract (24,225) –Impairment loss on an associate (20,686) –Fair value changes of derivative instruments (20,578) –Property, plant and equipment written off (8,664) –(Loss)/gainondisposalofproperty,plantandequipment (7,402) 33,954Exchange (loss)/gain, net (1,835) 5,520Realised (loss)/gain on derivative instruments, net (165) 92Bargain purchase arising from reverse acquisition (Note 6) – 154,686Bargain purchase arising from step-acquisition of joint venture (Note 6) – 1,290Remeasurement loss arising from step-acquisition of joint venture (Note 6) – (6,030)Impairment of goodwill – (311)Bad debts recovered 14 343Management fee income charged to a related company 47 –Insurance claims 43 3,406 Amortisation of deferred income 1,423 –Other miscellaneous income 435 –

(378,107) 192,950

111



28. (LOSS)/PROFIT BEFORE TAX

This is determined after charging the following:

Group

2016 2015

US$’000 US$’000

Audit fees paid to:

– Auditor of the Company 152 187

– Other auditors 21 47

Non-audit fees paid to:

– Auditor of the Company 43 86

– Other auditors – 30

Depreciation of property, plant and equipment 55,747 45,813

Directors’ remuneration*

– Salaries and bonuses 1,183 976

–Contributionstodefinedcontributionplans 13 20

Directors’ fees 127 193

Keyexecutiveofficers’remuneration

– Salaries and bonuses 1,287 1,833

–Contributionstodefinedcontributionplans 27 22

Allowance for doubtful debts, net 11,911 4,607

Operating lease expenses 60,611 59,653

Bad debts written off 67,608 –

* Refers to directors of the Company.

29. PERSONNEL EXPENSES

Group

2016 2015

US$’000 US$’000

Salaries and bonuses 39,608 49,366

Contributionstodefinedcontributionplans 650 617

Other personnel expenses 5,873 6,607

46,131 56,590

Personnelexpensesincludeamountsshownasdirectors’remunerationandfeesandkeyexecutiveofficers’remunerationin Note 28.

112


29. PERSONNEL EXPENSES (CONT’D)

Share options

In 2007, the shareholders approved the EOL Employee Share Option Scheme (“EOL ESOS”) for the granting of non-transferable options that are settled by physical delivery of the ordinary shares of the Company, to directors and key employees of the Company.

TheEOLESOSwillbeadministeredbytheEOLRemunerationCommittee,orsuchothercommitteecomprisingdirectorsduly authorised and appointed by the Board of Directors, which will decide the provisions and terms and condition of each grant.

There are no share option schemes for other corporations in the Group.

(a) Options to take up unissued shares

Duringthefinancialyear,nooptionstotakeupunissuedsharesoftheCompanyweregranted.

(b) Options exercised

Duringthefinancialyear,therewerenosharesoftheCompanyissuedbyvirtueoftheexerciseofanoptiontotakeup unissued shares.

(c) Unissued shares under option

Attheendofthefinancialyear,therewerenounissuedsharesoftheCompanyunderoption.

Employee Share Plan

The Company implemented the Employee Share Plan (the “Plan”) with the approval of shareholders at the Extraordinary General Meeting held on 22 August 2014. The Plan shall continue to be in force up to a maximum of ten years from 22 August2014.ThisPlangivestheflexibilitytoeitherallotandissuenewsharesorpurchaseanddeliverexistingtreasuryshares upon the vesting of awards.

Participants will receive fully paid shares free of charge, upon the Participant satisfying the criteria set out in the Plan. The vesting period for the shares granted is three years. The number of shares to be allocated to each participant will be determined at the end of the performance period based on the level of attainment of the performance targets and the prevailing market price of the Company’s share at grant date.

The Remuneration Committee is responsible for administering the share option and employee share plan.

As at date of this report, no shares have been granted under the Plan.

113



30. FINANCIAL INCOME

Group

2016 2015

US$’000 US$’000

Interest income from:

– Amortisation of interest income 2,410 629

– Banks 551 287

– Associate 521 1,735

3,482 2,651

31. FINANCIAL EXPENSES

Group

2016 2015

US$’000 US$’000

Interest expense

– Bank loans 18,687 12,723

– Finance leases 5,512 640

– Money market line 3,549 3,159

– Bank overdrafts 203 61

27,951 16,583

Included in cost of vessels under construction*

– Fixed assets – (363)

27,951 16,220

* Thecapitalisationrateusedtodeterminetheamounteligibleforcapitalisationwas2.53%to2.63%representingtheborrowingcoststofinancethevessels under construction in 2015.

114


32. (LOSS)/EARNINGS PER SHARE

(Loss)/earningsperordinaryshare(“EPS”)iscalculatedbydividingtheGroup’snet(loss)/profitattributabletoownersoftheCompanybytheweightedaveragenumberofordinarysharesoutstandingduringthefinancialyear.Thecalculationofthe basic and fully diluted earnings per share of the Group is based on the following:

Group

2016 2015

US$’000 US$’000

Net(loss)/profitattributabletoownersoftheCompany (535,240) 199,544

Number of weighted average ordinary shares (’000)

– Basic and diluted earnings per share 438,432 425,241

EPS (US cents)

– Basic and diluted (1.22) 0.47

The weighted average number of shares takes into account the reverse acquisition due to the business combination duringthepreviousfinancialyear.

33. RELATED PARTY TRANSACTIONS

Inadditiontotherelatedpartyinformationdisclosedelsewhereinthefinancialstatements,theGroupandtheCompanyenteredintotransactionswithrelatedcompaniesontermsagreedbetweenthepartiesduringthefinancialyearasshownbelow:

Group

2016 2015

US$’000 US$’000

Income

Revenue from related companies 55,059 47,746

Revenue from associates 2,002 2,614

Revenue from joint ventures 18 809

Management fee income charged to a related company 47 –

Interest income from an associate 521 1,735

Expenses

Cost of sales charged by related companies (625) (971)

Cost of sales charged by an associate (14,358) (32,080)

Interest expenses charged by the holding company (4,047) (582)

Management fees charged by the holding company (1,945) (4,115)

Management fees charged by a related company (689) (636)

Allowance for doubtful receivables from related companies (332) –

Allowance for doubtful receivables from joint ventures (8,455) –

Directors’remunerationandfeesandkeyexecutiveofficers’remunerationhavebeendisclosedinNote28.

115



34. CORPORATE GUARANTEES

As at 31 August, the Company had issued corporate guarantees to banks for granting banking facilities to certain subsidiaries, associates and joint ventures.

Group Company

2016 2015 2016 2015

US$’000 US$’000 US$’000 US$’000

Corporate guarantees given for the borrowings of:

– Joint ventures 80,654 104,439 80,654 104,439

– Associates 1,672 31,569 1,672 31,569

– Subsidiaries – – 181,641 117,404

Total 82,326 136,008 263,967 253,412

TheCompanyhadalso issuedcorporateguaranteesamounting toUS$5,835,000 in respectofcapitalexpendituresofsubsidiaries in relation to 3 vessels.

Corporate guarantees given by the Company will become due and payable on demand when an event of default occurs.

Themaximumamountofthefinancialguaranteecontractsareallocatedtotheearliestperiodwhichiswithinoneyear,inwhich the guarantee could be called.

With reference to Note 2.1 and Note 40, the holding company has issued corporate guarantees to banks for banking facilities and lessors for bareboat charter contracts. Due to the non-payment of principal, interest and bareboat charters by the subsidiaries, the holding company has received various letters of demand from the banks and lessors as an event of default has occurred.

35. COMMITMENTS

(a) Capital expenditure commitments

As at the end of the reporting period, the Group had the following capital commitments relating to the purchase of equipment, vessel and newbuilds.

Group

2016 2015

US$’000 US$’000

Purchase of vessel equipment – 17,454

Vessel purchase/newbuilds – 71,578

– 89,032

116


35. COMMITMENTS (CONT’D)

(b) Lease commitments – Group as lessee

The Group had various operating lease agreements for bareboat charter of vessels, leasing of land, rental of machineries, office premises and shipyardworkers’ accommodation. The Group has no non-cancellable lease commitments,whereby the lease period is currently not determinable as the related vessels are still under construction. These leases contain certain price adjustment clauses. The lease arrangements do not contain any escalation clauses, do not provide for contingent rents and do not contain restrictions on the Group’s activities concerning dividends, additional debts and further leasing. These leases have terms of renewal and purchase options during or at the end of the respective lease terms. Future minimum lease payments payable under non-cancellable operating leases were as follows as at 31 August:

Group

2016 2015

US$’000 US$’000

Not later than one year 52,186 76,090

Laterthanoneyearbutnotlaterthanfiveyears 171,395 250,065

Laterthanfiveyears 119,936 157,103

343,517 483,258

These leases have remaining lease terms of between 0 to 27(2015: 0 to 28) years.

(c) Lease commitments – Group as lessor

The Group charters a vessel under operating lease. At the end of the reporting period, the Group has contracted with a related company for the following future minimum lease receivable:

Group

2016 2015

US$’000 US$’000

Not later than one year 22,995 23,058

Laterthanoneyearbutnotlaterthanfiveyears 92,043 92,043

Laterthanfiveyears 57,393 80,388

172,431 195,489

Theleasehasremainingleasetermof8(2015:9)years.Subsequenttofinancialyearend,withreferencetoNote40(i), the related company has terminated the charter agreement due to occurrence of event of default.

117



36. CAPITAL AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

With reference to Note 2.1, the Group is currently in the midst of a Restructuring Exercise to deleverage substantially. Assuch,thepresentationanddisclosureofcapitalandfinancialriskmanagementobjectivesandpoliciesmaynotbeappropriate till the conclusion of the Restructuring Exercise.

37. FAIR VALUE OF ASSETS AND LIABILITIES

Fair value hierarchy

TheGroupclassifiesfairvaluemeasurementusingafairvaluehierarchythatreflectsthesignificanceoftheinputsusedin making the measurements. The fair value hierarchy has the following levels:

Level1 – Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities;

Level2 – InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly (i.e. prices) or indirectly (i.e. derived from prices); and

Level3 – Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).

(a) Assets and liabilities measured at fair value

The following table shows an analysis of each class of assets and liabilities measured at fair value at the end of the reporting period:

Group

Level 1 Level 2 Level 3 Total

US$’000 US$’000 US$’000 US$’000

Year ended 31 August 2016

Non-financial assets

Asset held for sale – – 29,597 29,597

Financial liabilities:

Derivativefinancialinstruments–Interestratecap and swap – 266 – 266

Derivativefinancialinstruments–putoption – – 20,719 20,719

– 266 20,719 20,985


Financial asset:

Available-for-sale investment 9,989 – – 9,989


Derivativefinancialinstruments – 404 – 404

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37. FAIR VALUE OF ASSETS AND LIABILITIES (CONT’D)

(a) Assets and liabilities measured at fair value (cont’d)

Company

Level 1 Level 2 Level 3 Total

US$’000 US$’000 US$’000 US$’000



Derivativefinancialinstruments–putoption – – 20,719 20,719


Financial asset:

Available-for-sale investment 9,989 – – 9,989

The Group’s and the Company’s available-for-sale investment was adjusted to nil from its fair value following PPT’s PN17statusandassuchthefairvaluemeasurementwastransferredtoLevel2duringthefinancialyear.Therewerenoothertransfersbetweenthedifferentlevelsofthefairvaluehierarchyduringthefinancialyear.

Level2fairvaluemeasurements

Derivative financial instruments – The fair value of derivatives are determined using valuation techniqueswithmarket observable inputs. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. The models incorporate various inputs including the credit quality of counterparties and interest rate curves. The fair value of interest rate swaps is calculated as the present value of the estimatedfuturecashflows.

(i) InformationaboutsignificantunobservableinputsusedinLevel3fairvaluemeasurements

Asset held for sale

The fair value of the Group’s assets held for sale is derived using a combination of valuation by an independent valuer and agreed contractual selling price on a willing buyer willing seller basis. The valuer used valuation techniques which involve certain estimates. The key assumptions used to determine the fair value of assets held for sale include oil price forecasts and production volume, inflation rate and a market-corroborateddiscount rate.

Derivativefinancialinstruments–putoption

Thefairvalueofderivativefinancialinstruments–putoptionisbasedonthedifferencebetweentheagreedcontractual selling price and fair value of the net assets to be acquired.

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(a) Assets and liabilities measured at fair value (cont’d)

(ii) MovementsinLevel3assetsandliabilitiesmeasuredatfairvalue

The following table presents the reconciliation for all assets and liabilities measured at fair value based on significantunobservableinputs(Level3):

Fair value measurements

using significant unobservable inputs

(Level 3)

$’000

Group

Asset held for sale

Balance at 1 September 2015 –

Additions 29,597

Balance at 31 August 2016 29,597

Derivative financial instruments – put option

Balance at 1 September 2015 –

Additions 20,719

Balance at 31 August 2016 20,719

(iii) Valuation policies and procedures

The directors oversee the valuation process and are responsible for the Group’s valuation policies and procedures.

Forallsignificantvaluationsusingvaluationmodelsandsignificantunobservableinputs,itistheGroup’spolicyto engage independent external valuation experts to perform the valuation. The directors are responsible for selecting and engaging valuation experts that possess the relevant credentials and knowledge on the subject of valuation, valuation methodologies and FRS 113 fair value measurement guidance.

For valuations performed by external valuation experts, the directors review the appropriateness of the valuation methodologies and assumptions adopted. The directors also evaluate the appropriateness and reliability of the inputs (including those developed internally by the Group) used in the valuations.

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(b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

(i) Trade and other receivables, trade and other payables, balances from/(to) subsidiaries, associates and joint ventures, cash and cash equivalents and cash pledged

The carrying amounts of these balances approximate fair values due to their short-term nature.

(ii) Loansandborrowingsatfloatingrateandleaseobligations

The carrying value of the balances (except for lease obligations) approximates fair value as these balances are of variable interest rate with re-pricing features.

The carrying value of lease obligations approximate fair value as the current lending rates for similar types of lending arrangements are not materially different from the rates obtained by the Group.

(c) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

The fair valueof financial assetsand liabilitiesbyclasses thatarenot carriedat fair valueandwhosecarryingamounts are not reasonable approximation of fair value are as follows:

Group

2016 2015

Carrying amount Fair value Carrying amount Fair value

US$’000 US$’000 US$’000 US$’000

Financial asset:

Longtermreceivables 12,634 16,410 37,591 38,213


Balance due to holding company 125,000 129,224 125,000 126,455

Balance due to a related company – – 31,970 *

Company

2016 2015

Carrying amount Fair value Carrying amount Fair value

US$’000 US$’000 US$’000 US$’000

Financial assets:

Loantoasubsidiary – * 125,000 *


Balance due to holding company 125,000 129,224 125,000 126,455

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(c) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value (cont’d)

Determination of fair value

Longtermreceivablesandbalanceduetoholdingcompany–FairvaluesareestimatedbasedonadiscountedcashflowbasisusingtheGroup’sweightedaverageinterestrateoffloatingrateloansof3.31%(2015:2.76%)whichisrepresentativeofthemarketrateapplicabletocompanieswithsimilarriskprofile.

* Loantoasubsidiaryandbalanceduetoarelatedcompany– Theamountsareunsecured,non-interestbearingandhavenofixedrepaymenttermsandarerepayableonlywhenthesubsidiary/

Group/Company’scashflowpermits.Accordingly,fairvalueisnotdeterminableasthetimingofthefuturecashflowsfortheloantoasubsidiary/balance due to the related company cannot be estimated reliably.

38. SEGMENT INFORMATION

For management reporting purposes, the Group is organised into two main operating divisions:

– Marine Services division is mainly engaged in the owning, chartering and the management of offshore support vessels serving the oil and gas industry; and

– Production Services division provides engineering and project management services for the conversion of FPSOs and production facilities to third party clients.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resourceallocationandperformanceassessment.Segmentperformanceisevaluatedbasedonprofitfromoperations.

Inter-segment pricing, if any, is determined on an arm’s length basis.

Income taxes are managed on a group basis and are not allocated to the operating segments.

In presenting geographical information, segment revenue is based on the billing location of customers. Non-current assets are based on the location of the companies that own those assets.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise net gains arising from Business Combinations.

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38. SEGMENT INFORMATION (CONT’D)

Marine Production Corporate Total

US$’000 US$’000 US$’000 US$’000

Financial year ended 31 August 2016

Revenue 165,498 2,081 – 167,579

Loss from operations (68,287) (607) (16,862) (85,756)

Share of results of associates 5,016 2,629 – 7,645

Share of results of joint ventures – 13,648 (4,254) 9,394

Financial income 2,958 522 2 3,482

Financial expenses (19,153) (2,149) (6,649) (27,951)

Impairment loss on property, plant and equipment (108,695) – – (108,695)

Impairment on available for sale investment – – (56,004) (56,004)

Impairment loss on an associate (20,686) – – (20,686)

Impairment loss on joint ventures – (77,296) (4,325) (81,621)

Property, plant and equipment written off (8,664) – – (8,664)

Bad debts written off (67,608) – – (67,608)

Provision for onerous contract (24,225) – – (24,225)

Fair value changes of derivative instruments – – (20,578) (20,578)

Lossrecognisedonremeasurementtofairvalueless costs to sell – (50,194) – (50,194)

Tax (3,779)

Netlossforthefinancialyear (535,240)

Assets

Segment assets 938,371 124,056 27,426 1,089,853

Liabilities

Segment liabilities 723,225 79,058 241,956 1,044,239

Other information

Capital expenditure(1) 195,548 – – 195,548

Depreciation 55,747 – – 55,747

Investment in associates 17,116 – – 17,116

Investment in joint ventures – 83,191 20,752 103,943

Asset held for sale – 29,597 – 29,597

(1) Capital expenditure consists of additions to property, plant and equipment

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Marine Production Corporate Total

US$’000 US$’000 US$’000 US$’000

Financial year ended 31 August 2015

Revenue 244,604 2,567 – 247,171

Profit from operations 53,930 899 (9,743) 45,086

Share of results of associates 4,402 7,214 – 11,616

Share of results of joint ventures – 17,066 (2,315) 14,751

Financial income 1,056 1,592 3 2,651

Financial expenses (12,177) (1,978) (2,065) (16,220)

Unallocated other operating income, net 149,633

Tax (7,973)

Netprofitforthefinancialyear 199,544

Assets

Segment assets 1,157,062 264,689 68,706 1,490,457

Liabilities

Segment liabilities 625,328 115,281 215,360 955,969

Other information

Capital expenditure(1) 87,268 – – 87,268

Depreciation 45,809 4 – 45,813

Investment in associates 33,222 77,162 – 110,384

Investment in joint ventures – 152,749 28,873 181,622

(1) Capital expenditure consists of additions to property, plant and equipment

Geographical information

Group

Revenue(1) 2016 2015

US$’000 US$’000

Singapore 21,375 9,443Southeast Asia 62,299 147,914Africa 54,872 44,803

Brazil 10,189 20,396India 9,995 16,707Australia 456 3,795Others 8,393 4,113

Total 167,579 247,171

Note:(1) Revenue is based on the location of customers.

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Information on major customers

Group

2016 2015

US$’000 US$’000

Marine division:

Customer 1 28,676 28,032

Customer 2 14,564 25,722

Customer 3 13,123 22,874

Production division 1,104 1,018

Group

Non-current assets 2016 2015

US$’000 US$’000

Singapore 663,306 806,403

Malaysia 135,545 153,305

India 28,394 59,703

Other countries 37,979 28,482

Total 865,224 1,047,893

39. DIVIDENDS

AconditionaldividendofUS$19,331,000waspaidon9October2014.

Nodividendsweredeclaredduringthecurrentandpreviousfinancialperiods.

40. EVENTS AFTER THE REPORTING PERIOD

(i) Winding-Up Application against Lewek Champion Shipping Pte Ltd

On5May2017,HaiJiang1401PteLtd(“HaiJiang”)filedawindingupapplicationwiththeHighCourtofSingaporetowindupLewekChampionShippingPteLtd(“LewekChampion”),awhollyownedsubsidiaryoftheCompanyonthebasisofLewekChampion’sfailuretopayHaiJiang,inter alia, outstanding charterhire.

ThewindingupapplicationagainstLewekChampionwasheardbeforetheHighCourtofSingaporeon14July2017andawindinguporderhasbeenmadeagainstLewekChampion.AndrewGrimmettandLimLooKhoon,bothcareofDeloittle&ToucheLLP,havebeenappointedasjointandseveralliquidatorsofLewekChampion.

TheCompanyhasanoutstandingpayabletoLewekChampionamountingtoapproximatelyUS$68,841,000.Inaddition,theGrouphasalsowrittenoffthedeferredconsiderationpertainingtothesaleofLewekChampion.

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40. EVENTS AFTER THE REPORTING PERIOD (CONT’D)

(ii) Termination of various bareboat charters

(a) Termination of bareboat charter of Lewek Toucan and Lewek Pelican

On14March2017,thewhollyownedsubsidiariesoftheCompany,EmasOffshorePteLtdandEmasOffshore(M)Sdn Bhd (collectively “Charterers”), respectively received notices of termination to (i) terminate the bareboat charter dated17March2016betweenSeabirdPenguinOffshoreLimited(“ToucanOwner”)andEmasOffshorePteLtdinrespect of the vessel “Lewek Toucan”; and (ii) terminate the bareboat charter dated 19 May 2016 between Seabird PelicanOffshoreLtd.(“PelicanOwner”)andtheEmasOffshore(M)SdnBhdinrespectofthevessel“Lewek Pelican”.

Both the Toucan Owner and Pelican Owner (Collectively “Owners”) demanded in their respective notices of termination that: (a) the Charterers must within 10 business days pay to the Owners the charter hire for the remaining charter period; (b) the Charterers must redeliver the vessels to the Owners and the Owners will require immediate possession of the vessels; and (c) the Charterers are liable to pay damages to the Owners arising from the termination of the bareboat charters.

On 22 March 2017, the Charterers received notices of demand from the Owners. The total amount demanded for Toucan Charter and Pelican Charter were approximately US$7,442,000 and US$10,064,000 respectively. TheCompany has also provided corporate guarantees for both charters and the Owners have reserved their rights to make a demand against the Company.

As the bareboat charters were terminated and the vessels were being redelivered to the Owners, the deferred considerationspertaining to thesaleofvesselsweredeemednot recoverableasat31August2016.Hence, thedeferred considerations were impaired and the impairment loss was recognised as “Bad debts written off” in the Income Statement.

(b) Termination of bareboat charter of Lewek Ariel, Lewek Lynx and Lewek Alkaid

On 2 November 2017, a wholly owned subsidiary of the Company, Emas Offshore (M) Sdn Bhd (“Charterer”), received notices of termination to (i) terminate the bareboat charter dated 17 February 2011 between Marina Morganite ShippingLimited(“ArielOwner”)andtheChartererinrespectofthevessel“Lewek Ariel”; (ii) terminate the bareboat charterdated31October2014betweenMarinaMossShippingLimited(“LynxOwner”)andChartererinrespectofthevessel “Lewek Lynx”; and (iii) terminate the bareboat charter dated 26 April 2011 between Marina Tanzanite Shipping Limited(“AlkaidOwner”)andChartererinrespectofthevessel“Lewek Alkaid” (collectively the “Charters”).

TheArielOwner,theLynxOwnerandtheAlkaidOwner(Collectively“Owners”)demandedintheirrespectivenoticesof termination that: (a) the vessels “Lewek Ariel”, “Lewek Lynx” and “Lewek Alkaid” (collectively the “Vessels”) must be safely redelivered at safe anchorage in Singapore or such other port or lace required by the Owners; (b) all relevant documents and information relating to the Vessels to be delivered to enable the Owners to take redelivery effectively; and (c) the Charterer should agree to the joint appointment of a surveyor nominated by the Owners so as to determine and agree to the condition of the Vessels at the time of delivery. The total amount demanded for the three vessels amountedtoUS$13,170,000.

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(iii) Corporate guarantees given for bank facilities pertaining to associated companies and joint ventures companies with PPT

The Company has issued proportionate corporate guarantees in relation to bank facilities pertaining to associated companies and joint ventures companies with PPT. The total outstanding bank facilities amount to approximately US$52,526,000.

On 12 October 2016, PPT has announced that it triggered a prescribed criteria pursuant to paragraph 8.04 and paragraph 2.1(f)ofPracticeNote17(“PN17”)oftheMainMarketListingRequirementofBursaMalaysiaSecuritiesBerhad(“BursaSecurities”)duetoitswhollyownedsubsidiary,PerisaiCapital(L)Inc’sdefaultinpaymentofprincipalandinterestofitsbonds. PPT was thus unable to provide a solvency declaration to Bursa Securities. As such an event of default has been triggered at the various bank facilities. Proportionate corporate guarantees given by the Company will become due and payableondemand.AstheCompanyisinvariousdiscussionswiththefinanciallenders(seeNote40(iv)below),suchcontingentliabilitiesarenotrecognisedinthestatementoffinancialposition.

(iv) Financial Restructuring

Asat31August2016,theGroupwasinanetcurrentliabilitiespositionandhadbreachedcertainfinancialcovenants.On13December2016,theCompanyannouncedthatithadreachedanagreementwithallofitsfinanciallenderstorefinanceitsfinancialobligationsoveraperiodof5yearsfrom12December2016.Theagreementalsocontemplatestheraisingofadditional working capital facilities (“Ongoing Initiatives”).

On 2 March 2017, the Company announced that the completion of the above Ongoing Initiatives have been delayed as theCompany’sultimateholdingcompanyhadvoluntarilyfiledapetitionforreliefunderChapter11oftheUnitedStatesBankruptcy Code to obtain the protection of the United States Bankruptcy Court while a restructuring exercise is being pursued. It also announced that if the Ongoing Initiatives do not result in a favourable and timely outcome, the Group will be faced with a going concern issue.

In August 2017, the Company entered into a binding term sheet with certain potential investors (“Term Sheet”) for the injectionofanaggregateamountofUS$50millionintotheCompany(“Investment”)aspartofthefinancialrestructuringoftheGroup(“RestructuringExercise”).ThetotalinvestmentamounttobemadebythepotentialinvestorsisUS$50millionfor the Restructuring Exercise. The Group intends to undertake a Restructuring Exercise to restructure its existing secured and unsecured liabilities as well as any outstanding obligations and any contingent liabilities in order to substantially deleverage the Company’s balance sheet and strengthen its working capital position, enabling the Group to continue as a going concern.

In connection with the Restructuring Exercise, the Company, together with its wholly owned subsidiaries, Emas Offshore PteLtdandEmasOffshoreServicesPteLtd(collectivelythe“Entities”),filedavoluntarilyapplicationintheHighCourtofthe Republic of Singapore under section 211B(1) of the Companies Act (Chapter 50) (the “Applications”).

Pursuant to section 211B(8) of the Companies Act, during the period commencing on the date of the filing of theApplications and ending on the earlier of 30 days after the Applications are made and the date on which the Applications are decided by the Court, an automatic moratorium will take effect and no order may be made, and no resolution may be passed, for the winding up of the Entities. This will thus provide stability for the daily operations of the Group, enabling it to continue operations with the support of the key trade suppliers. The automatic moratorium also provides the Entities an opportunity as well as adequate time to pursue the Restructuring Exercise.

127




(iv) Financial Restructuring (cont’d)

Subject to the completion of the Investment and successful restructuring of the liabilities of the Group, the balance sheet of the Group and Company will be deleveraged substantially and the new funds will provide additional working capital which would enable the Group to continue as a going concern.

Although the Restructuring Exercise has yet to be concluded, the potential investors and the Company are continuing to work together to progress the Restructuring Exercise.

(v) Financial Restructuring of ECS

Subsequent to31August2016,ECSwent intofinancial restructuringunderChapter11on27February2017and theproposed restructuring plan was approved by the Court on 29 June 2017. Under the Court’s approved restructuring plan, the unsecured claims against ECS are impaired and these claims will be paid out of the remaining cash pool.

OftheunsecuredreceivablesofUS$4,748,000duefromECS,theGroupexpectstorecoversignificantlylesserthantheamountowed.Noallowanceforimpairmenthasbeenmadeintheseconsolidatedfinancialstatements.

(vi) Financial Restructuring of Triyards

On6September2017,TriyardsannouncedthatithadengagedafinancialadvisorwhoiscurrentlyworkingwithTriyardswith an aim to put up restructuring plan to its various stakeholders. In light of this, Triyards is not in a position to assess reasonablyitsfinancialpositionandcouldhaveapotentialgoingconcernissueuntilaviablerestructuringplanisinplace.

Asat31August2016,theGrouphadreceivablesduefromTriyardsamountingtoUS$1,766,000andtheseamountsmightpotentially be unrecoverable if Triyards is unable to resolve its going concern issue.

41. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

Thefinancialstatements for thefinancialyearended31August2016wereauthorised for issue inaccordancewitharesolution of the directors on 8 December 2017.

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TWENTYLARGESTSHAREHOLDERSASOF15JANUARY2018

Name Holding Percentage1 Country

1 EZRAHOLDINGSLIMITED2 330,844,316 75.25 SINGAPORE

2 CLEARSTREAMBANKINGS.A. 76,954,678 17.50 LUXEMBOURG

3 HYGROVEINVESTMENTSLIMITEDROOM3201,32NDFLOOR 4,208,000 0.96 HONGKONG

4 NORDNETBANKAB 2,426,369 0.55 SWEDEN

5 LARSENDAGROGER 944,500 0.21 NORWAY

6 LGTBANKAG 678,493 0.15 LIECHTENSTEIN

7 NORDNETLIVSFORSIKRINGAS 644,754 0.15 NORWAY

8 ERIKSTADOLAVAAGE 555,555 0.13 NORWAY

9 SIMOOIKEONG 500,114 0.11 REPUBLICOFKOREA

10 CITIBANK,N.A.S/AMKESA/CCLIENTS 492,098 0.11 SINGAPORE

11 ØVRETVEIT ODD TORE 484,454 0.11 NORWAY

12 COLORADOEIENDOMAS 400,000 0.09 NORWAY

13 LANDROKENNETH 350,000 0.08 NORWAY

14 VØRNER INVEST AS 317,635 0.07 NORWAY

15 LIERPERARVE 310,000 0.07 NORWAY

16 AARVIKKJETIL 300,000 0.07 NORWAY

17 FAGERLANDAS 300,000 0.07 NORWAY

18 JANBUBJØRGLISBET 300,000 0.07 NORWAY

19 KAAFARANIEZZAT 250,000 0.06 NORWAY

20 DEUTSCHEBANKAKTIENGESELLSCHAFTS/ACLIENTSACCOUNT-DCS

248,250 0.06 GERMANY

421,509,216 95.87

1 The percentages are calculated based on 439,672,754 shares in issuance2HeldunderDBSNominees(Private)LimitedandOversea-ChineseBankNomineesPrivateLimited

STATISTICS OFSHAREHOLDINGS

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NOTICE OFANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of EMAS Offshore Limited (“the Company”) will be held at 51 Shipyard Road, Singapore 628139 on Tuesday, 13 February 2018 at 10.30 am (Singapore time) for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Statement and the Audited Financial Statements of the Company forthefinancialyearended31August2016togetherwiththeAuditor’sReportthereon.

(Resolution 1)

2. To re-electMr.AdarashKumarA/LChranjiLalAmarnath,whowill retireby rotationpursuant toArticle 91 of the Company’s Constitution and who, being eligible, will offer himself for re-election as a Director of the Company.

(Resolution 2)

3. To re-reappoint the following Directors as Director of the Company under Article 97, who were previouslyre-appointedtoholdofficeuntilthisAnnualGeneralMeetingpursuanttoSection153(6)of the Singapore Companies Act, Chapter 50 (the “Companies Act”), which was in force immediately before 3 January 2016: -

Mr. Cuthbert Ignatious Jeyaretnam Charles^

Mr.LeeKianSoo(Resolution 3)(Resolution 4)

^ Mr. Cuthbert Ignatious Jeyaretnam Charles will, upon re-appointment as Director of the Company, remain as Chairman of the Remuneration committee and a member of the Audit Committee and Nominating Committee and will be considered independent. There are no material relationships (including immediate family relationships) between Mr. Charles and the other directors or the Company.

4. Toapprove thepaymentofDirectors’ feesof up toUS$127,000 for thefinancial year ended31August2017.(2016:US$127,000)

(Resolution 5)

5. Tore-appointErnst&YoungLLPastheCompany’sAuditorsandtoauthorisetheDirectorstofixtheir remuneration.

(Resolution 6)

6. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.

By Order of the Board

LeeKianSooDirector

Singapore, 26 January 2018

EMASOffshoreLimitedisapubliclimitedcompanysubjecttotherulesoftheSingaporeCompaniesAct,Chapter50.Asofthedate of this Notice, the Company has issued 439,672,754 Shares, each of which represents one vote. The Shares have equal rights also in all other respects. A Shareholder has the right to attend the Annual General Meeting either in person or through a proxy. A proxy need not be a shareholder of the Company. Each Shareholder has the right to vote for the number of shares held by such member. Please refer to the notes below for the procedure to attend and vote at the AGM.

130

Notes:

1. No Shareholder shall be entitled to attend and vote in person or by proxy unless Section 1 or Section 2 of the Attendance/Proxy Form, whichever is applicable, is completed, together with the power of attorney or other authority (if any) under whichitissigned,oranotarially-certifiedcopyofthatpowerofattorney,issenttotheDepositoryRegisterbynotlessthan48 hours before the time for holding the Annual General Meeting (the “Meeting”).

2. A Shareholder entitled to attend and vote at the Meeting and who wishes to:

(a) be present in person to vote; or(b) appoint a proxy or proxies to be present in person to vote in his stead, or(c) appoint the Chairman of Meeting to vote in his stead,

at the Meeting should note the following:

Holders of Shares registered on the Oslo BørsHolders of Shares registered on the Singapore Exchange Securities Trading Limited

The Attendance/Proxy Form must be sent to DNB Bank ASA in either 1 of the 3 methods mentioned below not less than 48 hours before the time appointed for holding the Annual General Meeting, to obtain a Power of Attorney in connection with voting at the Meeting:

Method 1

P.O. Box address (if mailing):DNB Bank ASARegistrars Dept./ Mr. Stig Tore Strøm P.O. Box 1600, Sentrum, 0021 OsloNorway

Method 2

Street address (if by courier):DNB Bank ASARegistrars Dept./ Mr. Stig Tore StrømDronning Eufemias gate 300191 OsloNorway

Method 3

If by e-mail (to DNB Bank ASA):E-mail: [email protected]

The Attendance/Proxy Form must be deposited at the officeof BoardroomCorporate&AdvisoryServicesPte.Ltd. locatedat50RafflesPlace,#32-01SingaporeLandTower, Singapore 048623 not less than 48 hours before the time appointed for holding the Annual General Meeting.


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3. (a) A Shareholder, who is not a relevant intermediary, is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy need not be a Shareholder of the Company.

(b) A Shareholder who is a relevant intermediary, is entitled to appoint more than two proxies to attend and vote at the Meeting, but each proxy must be appointed to exercise the rights attached to a different Share or Shares held by such Shareholder.

“Relevant intermediary” has the meaning ascribed to it in Section 181 of the Companies Act.

4. A corporation which is a Shareholder may, by resolution of its directors, authorise any person to act as its representative at any meetings of the Company, and such representative shall be entitled to exercise the same powers on behalf of the corporation which he represents as if he had been an individual Shareholder.

5. Each of the resolutions to be put to the vote of the shareholders at the Meeting (and at any adjournment thereof) will be voted on by way of a poll.

Personal data privacy: By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.


This page has been intentionally left blank

(Please see notes overleaf before completing this Form)

Section 1: Please complete this section if you are attending the Meeting in person

I/We, [Name] [NRIC/Passport no.] of

[Address]

being (a) holder(s) of Ordinary SharesofEMASOffshoreLimited(the“Company”),herebygivesuchnoticetoDNBBank ASA for me/us to attend the Annual General Meeting (the “Meeting”) to be held at 51 Shipyard Road, Singapore 628139 on Tuesday, 13 February 2018 at 10.30 am (Singapore time) and at any adjournment thereof.

Section 2: Please complete this section if you are appointing proxy/proxies to attend or the Chairman of meeting to vote on your behalf

I/We, [Name] [NRIC/Passport no.] of

[Address]

being(a)holder(s)of OrdinarySharesofEMASOffshoreLimited(the“Company”),herebyauthoriseDNBBankASAto constitute and appoint the following to vote for me/us on my/our behalf at the Annual General Meeting (the “Meeting”) to be held at 51 Shipyard Road, Singapore 628139 on Tuesday, 13 February 2018 at 10.30 am (Singapore time) and at any adjournment thereof, on all matters coming before the Meeting:(please select one of the following with a tick [√] within the box provided.)

£ I/We wish to appoint the following to attend the Meeting in person:

Name NRIC/Passport No. Address No of Shares

and/or (delete as appropriate)

Name NRIC/Passport No. Address No of Shares

£ I/We appoint the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf.

I/We direct my/our proxy/proxies to vote for or against or abstain from the Resolutions proposed at the Meeting as indicated below.IfnospecificdirectionastovotingisgivenorintheeventofanyothermatterarisingattheMeetingandatanyadjournmentthereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.

(Please indicate your vote “For” or “Against” with a tick [√] within the box provided.)

No. Resolutions relating to: For Against

1. AdoptionofDirectors’StatementandAuditedFinancialStatementsforthefinancialyearended 31 August 2016

2. Re-electionofMr.AdarashKumarA/LChranjiLalAmarnathasaDirectoroftheCompany.

3. Re-appointment of Mr. Cuthbert Ignatious Jeyaretnam Charles

4. Re-appointmentofMr.LeeKianSoo

5. ApprovalofDirectors’feesforthefinancialyearended31August2017

6. Re-appointmentofErnst&YoungLLP,SingaporeastheCompany’sAuditorsandtoauthorisetheDirectorstofixtheirremuneration

Compulsory for all holders of the Shares to sign and complete the date

Signature(s): Date: Note: Please sign extractly as name appears above. Joint owners should each sign. When signing as attorney, executor, administrator or guardian, please give full title as such.

ATTENDANCE/PROXY FORM

Notes:1. Please insert the total number of Shares held by you in either Section 1 or Section 2 of the Attendance/Proxy Form, whichever

is applicable. If no number is inserted, the Attendance/Proxy Form shall be deemed to relate to all the Shares held by you.

2. No Shareholder shall be entitled to attend and vote in person or by proxy unless Section 1 or Section 2 of the Attendance/Proxy Form, whichever is applicable, is completed, together with the power of attorney or other authority (if any) under which itissigned,oranotarially-certifiedcopyofthatpowerofattorney,issenttotheDepositoryRegisterbynotlessthan48hoursbefore the time for holding the Annual General Meeting (the “Meeting”).

3. A Shareholder entitled to attend and vote at the Meeting and who wishes to:

(a) be present in person to vote; (b) appoint a proxy or proxies to be present in person to vote in his stead, or(c) appoint the Chairman of Meeting to vote in his stead.

at the Meeting should note the following:

Holders of Shares registered on the Oslo BørsHolders of Shares registered on the Singapore Exchange Securities Trading Limited

The Attendance/Proxy Form must be sent to DNB Bank ASA in either 1 of the 3 methods mentioned below not less than 48 hours before the time appointed for holding the Annual General Meeting, to obtain a Power of Attorney in connection with voting at the Meeting:

Method 1P.O. Box address (if mailing):DNB Bank ASARegistrars Dept./ Mr. Stig Tore Strøm P.O. Box 1600, Sentrum, 0021 OsloNorway

Method 2Street address (if by courier):DNB Bank ASARegistrars Dept./ Mr. Stig Tore StrømDronning Eufemias gate 300191 OsloNorway

Method 3If by e-mail (to DNB Bank ASA):E-mail: [email protected]

The Attendance/Proxy Form must be deposited at the officeofBoardroomCorporate&AdvisoryServicesPte.Ltd.locatedat50RafflesPlace,#32-01SingaporeLandTower,Singapore 048623 not less than 48 hours before the time appointed for holding the Annual General Meeting.

4. If a Shareholder nominates two proxies, then the Shareholder shall specify the number of his Shares to be represented by eachsuchproxy,failingwhichthefirstnamedproxyshallbetreatedasrepresentingonehundredpercent.(100%)oftheshareholdingandanysecondnamedproxyasanalternatetothefirstnamed.

5. A Shareholder who is a relevant intermediary is entitled to appoint more than two proxies to attend and vote instead of the Shareholder, but each proxy must be appointed to exercise the rights attached to a different Share or Shares held by such Shareholder. Where such Shareholder appoints more than two proxies, the appointments shall be invalid unless the ShareholderspecifiesthenumberofSharesinrelationtowhicheachproxyhasbeenappointed.Relevantintermediaryhasthe same meaning ascribed to it in Section 181 of the Companies Act.

6. The Attendance/Proxy Form appointing a proxy or proxies, in the case of an individual, shall be signed by the appointor or of his attorney and in the case of a corporation, shall be either given under common seal or signed on its behalf by an attorney oradulyauthorisedofficerofthecorporation.

7. Any corporation which is a Shareholder may, by resolution of its directors or other governing body authorise such person asitthinksfittoactasitsrepresentativeatanymeetingsoftheCompany,andthepersonsoauthorisedshallbeentitledtoexercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual Shareholder.

8. General: The Company shall be entitled to reject the Attendance/Proxy Form if it is incomplete, improperly completed or illegibleorwherethetrueintentionsoftheappointorarenotascertainablefromtheinstructionsoftheappointorspecifiedin the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company shall be entitled to reject an instrument of proxy lodged by any Depositor whose name does not appear in the Depository Register as at forty-eight (48) hours before the appointed time of the Meeting.

Personal data privacy:By submitting the Attendance/Proxy Form appointing a proxy(ies) and/or representative(s), the Shareholder accepts and agrees to the personal data privacy terms set out in the Notice of AGM dated 26 January 2018.

Designed and Produced by Rockstar Atelier

CRN 200702224N51 Shipyard RoadSingapore 628139Telephone: (65) 6349 8535Facsimile: (65) 6224 0621

www.emasoffshore.com

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